In December 2010, Gomez Company’s manager estimated next year’s total direct labor cost assuming 50 persons working an average of 2,090 hours each at an average wage rate of $15 per hour. The manager also estimated the following manufacturing overhead costs for year 2011.

Problem 19-4A Overhead allocation and adjustment using a predetermined overhead rate L.O. P3, P4

In December 2010, Gomez Company’s manager estimated next year’s total direct labor cost assuming 50 persons working an average of 2,090 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	$	233,650
Factory supervision		126,000
Rent on factory building		82,000
Factory utilities		45,900
Factory insurance expired		34,800
Depreciation—Factory equipment		243,000
Repairs expense—Factory equipment		30,800
Factory supplies used		35,300
Miscellaneous production costs		15,000
Total estimated overhead costs	$	846,450

At the end of 2011, records show the company incurred $789,912 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $358,000; Job 202, $329,000; Job 203, $174,000; Job 204, $417,000; and Job 205, $193,000. In addition, Job 206 is in process at the end of 2011 and had been charged $11,800 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. (Omit the "%" sign in your response.)

Predetermined overhead rate

54 %

1b.	Determine the total overhead cost applied to each of the six jobs during year 2011. (Omit the "$" sign in your response.)

Job No.	Applied Overhead
201	$ 193,320
202	177,660
203	93,960
204	225,180
205	104,220
206	6,372
Total	$ 800,712

1c.	Determine the over- or underapplied overhead at year-end 2011. (Input all amounts as positive values.Omit the "$" sign in your response.)

Overapplied overhead

$ 10,800

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. (Omit the "$" sign in your response.)

Date	General Journal	Debit	Credit
Dec. 31	Factory overhead	10,800
	Cost of goods sold		10,800

Worksheet

Problem 19-4A Overhead allocation and adjustment