E2-13 Easy Decorating uses a job order costing system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year.
Budgeted overhead $960,000
Actual overhead $982,800
Budgeted decorator hours 40,000
Actual decorator hours 40,500
The company uses Operating Overhead in place of Manufacturing Overhead.
Required:
a) Compute the predetermined overhead rate.
b) Prepare the entry to apply the overhead for the year.
c) Determine whether the overhead was under- or overapplied and by how much.
Click here for the solution: Easy Decorating uses a job order costing system to collect the costs of its interior decorating business
