The predetermined overhead allocation rate for Lemke, Inc , is based on estimated direct labor costs of $250,000 and estimated factory overhead of $550,000 Actual costs incurred were Direct materials $250,000 Direct labor 300,000 Indirect materials 155,000 Indirect labor 225,000 Sales commissions 50,000 Factory depreciation 170,000 Property taxes, factory 115,000 Advertising 62,500 (a) Calculate the predetermined overhead rate and calculate the overhead applied during the year (b) Determine the amount of over or underapplied overhead and state whether it was under or overapplied Prepare the journal entry to eliminate the over or underapplied overhead

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Question: The predetermined overhead allocation rate for Lemke, Inc., is based on estimated direct labor costs of $250,000 and estimated factory overhead of $550,000. Actual costs

The predetermined overhead allocation rate for Lemke, Inc., is based on estimated direct labor costs of $250,000 and estimated factory overhead of $550,000. Actual costs incurred were:

Direct materials..	$250,000
Direct labor..	300,000
Indirect materials	155,000
Indirect labor..	225,000
Sales commissions.	50,000
Factory depreciation	170,000
Property taxes, factory...	115,000
Advertising.....	62,500

(a) Calculate the predetermined overhead rate and calculate the overhead applied during the year.

(b) Determine the amount of over- or underapplied overhead and state whether it was under or overapplied. Prepare the journal entry to eliminate the over- or underapplied overhead.

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