The predetermined overhead allocation rate for Newton, Inc , is based on estimated direct labor costs of $400,000 and estimated factory overhead of $800,000 Actual costs incurred were Indirect materials $17,000 Indirect labor 13,000 Direct materials 75,000 Direct labor 30,000 Advertising 50,000 Factory depreciation 17,000 Factory Property taxes 12,000 Sales Commissions 100,500 (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 Newton, Inc., is based on estimated direct labor costs of $400,000 and estimated factory overhead of $800,000. Actual costs

The predetermined overhead allocation rate for Newton, Inc., is based on estimated direct labor costs of $400,000 and estimated factory overhead of $800,000. Actual costs incurred were:

Indirect materials..	$17,000
Indirect labor..	13,000
Direct materials	75,000
Direct labor..	30,000
Advertising.	50,000
Factory depreciation	17,000
Factory Property taxes...	12,000
Sales Commissions .....	100,500

(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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