Williams Inc. manufactures quality clothing. The company uses a normal costing system, using a predetermined overhead rate to charge overhead cost to production. The overhead rate for the current month was based on estimated overhead costs of $24,000, and 6,000 machine hours. The following data relate to the activities for the month of December, 2016.

 

Manufacturing overhead costs incurred:

Property taxes............................. $ 1,600

Utilities, factory......................... 2,600

Depreciation, factory.................. 13,000

Insurance, factory........................ 4,500

Indirect labor............................ 5,100

Other costs incurred:

Purchase of raw materials......... $15,000

Direct labor cost................... 2,000

Selling and administrative costs… 99,000

Inventories:

Raw materials, beginning............ $ 5,000

Raw materials, ending............... 4,400

Work in process, beginning.......... 3,500

Work in process, ending............. 4,500

Actual machine hours................... 7,000

 

Required:

1. Compute the predetermined overhead rate.

 

 

 

 

 

 

2. Compute the amount of applied overhead cost for the month of December.

 

 

 

 

 

 

 

3. Prepare the journal entry to dispose of the under- or over-applied overhead. The amount is considered immaterial and not prorated. Omit the journal entry explanation.