The predetermined overhead allocation rate for Guaga, Inc., is based on estimated direct labor costs of $400,000 and estimated factory overhead of $500,000. Actual costs incurred were: indirect material $155,000; indirect labor $170,000;factory property tax $ 15,000, factory equipmentt depreciation 28,000; office buidling depericiation $22,000; factory supervision $ 40,000; interest expense $ 17,000; and factory utilities $50,000. The actual labor cost was $364,900. (a) Calculate the predetermined overhead rate and calculate the overhead applied during the year. (b) Determine the amount of over- or underapplied overhead and prepare the journal entry to eliminate the over- or underapplied overhead assuming that it is not material in amount.

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