Question: At the beginning of the year Gaudi Company estimated the

At the beginning of the year, Gaudi Company estimated the following:
Overhead .............. $432,000
Direct labor hours ......... 90,000
Gaudi uses normal costing and applies overhead on the basis of direct labor hours. For the month of January, direct labor hours were 7,650. By the end of the year, Gaudi showed the following actual amounts:
Overhead ............ $436,000
Direct labor hours.......... 89,600
Assume that unadjusted Cost of Goods Sold for Gaudi was $707,000.

1. Calculate the predetermined overhead rate for Gaudi.
2. Calculate the overhead applied to production in January.
3. Calculate the total applied overhead for the year. Was overhead over- or underapplied? By how much?
4. Calculate adjusted Cost of Goods Sold after adjusting for the overhead variance.

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