Tescott Company and Heizer Company both apply overhead to the Work in Process Inventory account using direct labor hours. The following information is available for both companies for the year:
Tescott Company Heizer Company
Actual manufacturing overhead.......................... $320,000....................... $600,000
Actual direct labor hours..................................... 20,000.......................... 24,000
Under applied overhead.......................................................................... 24,000
Over applied overhead.......................................$48,000
Required
a. Compute the predetermined overhead rate for each company.
b. Using T-accounts, record the entry to close the over applied or under applied overhead at the end of the accounting period for each company, assuming the amounts are immaterial.