Calculate and Use Overhead Rate

Selected data for the consulting department of Austin Consulting, Inc., follow:

Estimated consulting overhead cost for the year	$405,000
Estimated direct labor cost for the year (@ $9/hr.)	450,000
Actual manufacturing overhead cost for January	24,000
Actual direct labor cost for January (1,200 hours)	16,500

Assuming that direct labor cost is the basis for applying consulting overhead,

a. Calculate the predetermined overhead rate.

Answer%

b. Prepare a journal entry that applies consulting overhead for January.

General Journal
Description	Debit	Credit
AnswerConsulting overheadCost of goods soldFinished goods inventoryWork in process inventory	Answer	Answer
AnswerConsulting overheadCost of goods soldFinished goods inventoryWork in process inventory	Answer	Answer

c. By what amount is consulting overhead over- or underapplied in January?

Consulting overhead was Answerover-appliedunder-applied by $Answer in