Reference no: EM131814006

Question - In December 2010, Gomez Company's manager estimated next year's total direct labor cost assuming 50 persons working an average of 2,070 hours each at an average wage rate of $15 per hour. The manager also estimated the following manufacturing overhead costs for year 2011.

Indirect labor	$214,750
Factory supervision	123,000
Rent on factory building	88,000
Factory utilities	44,200
Factory insurance expired	34,600
Depreciation-Factory equipment	245,000
Repairs expense-Factory equipment	30,900
Factory supplies used	34,900
Miscellaneous production costs	23,000
Total estimated overhead costs	$838,350

At the end of 2011, records show the company incurred $789,080 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $362,000; Job 202, $333,000; Job 203, $170,000; Job 204, $422,000; and Job 205, $183,000. In addition, Job 206 is in process at the end of 2011 and had been charged $12,000 for direct labor. No jobs were in process at the end of 2010. The company's predetermined overhead rate is based on direct labor cost.

Required

1a. Determine the predetermined overhead rate for year 2011.

1b. Determine the total overhead cost applied to each of the six jobs during year 2011.

1c. Determine the over- or underapplied overhead at year-end 2011.

2. Assuming that any over- or underapplied overhead is not material, prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold at the end of year 2011.