Exercise $15-26($Algo$)$ Computing applied overhead and closing over$-$ or underapplied overhead LO P$4$

At the beginning of the year, Custom Manufacturing set its predetermined overhead rate using the following estimates: overhead

costs, $$1,020,000,$ and direct materials costs, $$600,000.$ At year$-$end, the company reports that actual overhead costs for the year are

$$1,028,400$ and actual direct materials costs for the year are $$600,000.$

Determine the predetermined overhead rate using estimated direct materials costs

Enter the actual overhead costs incurred and the amount of overhead cost applied to jobs during the year using the

predetermined overhead rate. Determine whether overhead is over$-$ or underapplied $($and the amount$)$ for the year.

Prepare the entry to close any over$-$ or underapplied overhead to Cost of Goods Sold.

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Determine the predetermined overhead rate using estimated direct materials costs.