Lund Products, Inc., uses a predetermined overhead rate in its production, assembly, and testing departments. One rate is used for the entire company; it is based on machine hours. The rate is determined by analyzing data from the previous year to determine the percentage change in costs. Thus the 20x9 overhead rate will be based on the percentage change multiplied by the 20x8 costs. Lise Jensen is about to compute the rate for 20x9 using the following data:

In 20x9, the cost of indirect materials is expected to increase by 30 percent over the previous year. The cost of indirect labor, utilities, machinery depreciation, property taxes, and insurance is expected to increase by 20 percent over the previous year. All other expenses are expected to increase by 10 percent over the previous year. Machine hours for 20x9 are estimated at 45,980.
Required
1. Compute the projected costs and the overhead rate for 20x9 using the information about expected cost increases.
2. During 20x9, Lund Products completed the following jobs using the machine hours shown:

Determine the amount of overhead applied to each job. What was the total overhead applied during 20x9?
3. Actual overhead costs for 20x9 were $234,485. Was overhead underapplied or overapplied in 20x9? By how much? Should the Cost of Goods Sold account be increased or decreased to reflect actual overhead costs?
4. At what point during 20x9 was the overhead rate computed? When was it applied? Finally, when was underapplied or overapplied overhead determined and the Cost of Goods Sold account adjusted to reflect actualcosts?

20x7 20x8 Machine hours Overhead costs 38,000 41,800 Indirect materials Indirect labor Supervision Utilities Labor-related costs Depreciation, factory Depreciation, machinery Property taxes Insurance Miscellaneous overhead Total overhead 44,500 57,850 25,440 41,580 11,280 9,020 10,780 27,240 2,880 1,920 4,840 $162,000 S192,830 21,200 37,800 9,400 8,200 9,800 22,700 2,400 1,600 4,400 Job No. MachineHos ob No Machine Hours H-142 H-164 H-175 7,840 5,260 8,100 -201 H-218 H-304 10,680 12,310 2.460