E$17-19$ Allocating and adjusting manufacturing overhead

Learning Objectives $3,5$

$3.$ Underallocated by $$8,800$

Selected cost data for Classic Print Co$.$ are as follows:

Estimated manufacturing overhead cost for the year $ $125,000$

Estimated direct labor cost for the year $78,125$

Actual manufacturing overhead cost for the year $116,000$

Actual direct labor cost for the year $67,000$

Requirements

Compute the predetermined overhead allocation rate per direct labor dollar.

Prepare the journal entry to allocate overhead costs for the year.

Use a T$-$account to determine the amount of underallocated or overallocated manufacturing overhead.

Prepare the journal entry to adjust for the underallocated or overallocated manufacturing overhead.