The following information relates to Beautiful Designs Pty Ltd for the year just ended:

Required:
1. Calculate the firm's predetermined overhead rate. Which was based on direct labour hours.
2. Calculate the overapplied or underaplied overhead for the year.
3. Prepare a journal entry to close the manufacturing overhead account to cost of goods sold.
4. What caused the overapplied or underapplied overhead?

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Budgeted direct labour cost 80 000 hours @ $22 per hour 78 000 hours @ $25 per hour Actual direct labour cost $1 048 000 Budgeted manufacturing overhead Actual manufacturing overhead: $256 000 Depreciation Property taxes 19 000 Indirect labour 88 000 Supervisory salaries 210 000 Electricity 48 000 25 000 Insurance 290 000 Factory rent 64 000 Indirect material (see data below) Indirect material: $60 000 Beginning inventory, 1 January 84 000 Purchases 80 000 Ending inventory, 31 December