Overhead is applied to a single product using direct labour-hours. Fixed overhead cost should be $180,000 per year for a planned volume of production of 20,000 units of output. During the year, the company incurred fixed overhead cost of $181,000. According to the normal costing system, the following cost will be recorded as applied fixed overhead cost: $210,000 from 35,000 actual labour-hours worked. The productivity of labour during the year was calculated as 0.6286 units of output per labour-hour. The organization uses a standard costing system.

Required:

Prepare all pertinent journal entries to record the activity relating to incurrence and application of fixed overhead costs. Assume that all actual overhead costs are credited to the following payables account: “Fixed Overhead Costs Payable.”