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Jackson uses a predetermined overhead rate. Overhead for the next twelve months is estimated to be $400,000. Jackson applies overhead as a percentage of direct labor cost. Direct labor costs are estimated to be $500,000 for the next year. During the year actual direct labor costs amounted to $520,000 and the actual overhead was as follows: Maintence 20,000 Indirect materials 20,000 Indirect labor 90,000 Factory rent 80,000 Depreciation 110,000 Payroll taxes 80,000 Other 20,000 Total 420,000
Required:
(1) Calculate the over/under-applied overhead for the year.
(2) Assuming that the over/under-applied overhead is immaterial, give the journal entry to closeout the accounts.
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