The following information pertains to Paramus Metal Works for the year just ended.

Budgeted direct-labor cost: 77,000 hours (practical capacity) at $17 per hour

Actual direct-labor cost: 79,000 hours at $18 per hour

Budgeted manufacturing overhead: $993,300

Budgeted selling and administrative expenses: $417,000

Actual manufacturing overhead:

Depreciation.......................................................................... $225,000

Property taxes......................................................................... 19,000

Indirect labor........................................................................... 79,000

Supervisory salaries.................................................................210,000

Utilities.................................................................................... 58,000

Insurance................................................................................. 32,000

Rental of space.......................................................................295,000

Indirect material (see data below........................................... 79,000

Indirect material:

Beginning inventory, January 1............................................. 46,000

Purchases during the year..................................................... 95,000

Ending inventory, December 31........................................... 62,000

Required:

1. Compute the firm’s predetermined overhead rate, which is based on direct-labor hours.

2. Calculate the overapplied or underapplied overhead for the year.

3. Prepare a journal entry to close out the Manufacturing Overhead account into Cost of Goods Sold.

4. Build a spreadsheet: Construct an Excel spreadsheet to solve requirements (1) and (2) above. Show how the solution will change if the following data change: budgeted manufacturing overhead was $990,000, property taxes were $25,000, and purchases of indirect material amounted to $97,000.