Cardella Company applies overhead on the basis of direct labor costs. The company estimates annual overhead costs will be $760,000, and annual direct labor costs will be $950,000.
During February, Cardella works on two jobs: A16 and B17. Summary data concerning these jobs are as follows.
Manufacturing Costs Incurred Purchased $54,000 of raw materials on account.
Factory labor $76,000, plus $4,000 employer payroll taxes.
Manufacturing overhead exclusive of indirect materials and indirect labor $59,800.
Assignment of Costs

The company completed Job A16 and sold it on account for $150,000. Job B17 was only partially completed.
Instructions

(a) Compute the predetermined overhead rate.

(b) Journalize the February transactions in the sequence followed in the chapter.

(c) What was the amount of under- or overapplied manufacturing overhead?

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Direct materials: Indirect materials: Direct labor: Indirect labor: Job A16 $27,000, Job B17 $21,000 $3,000 Job A16 $52,000, Job B17 $26,000 $2,000