(Predetermined Overhead Rate) For 2013, Omaha Mechanical has amonthly overhead cost formula of $42,900 + $6 per direct laborhour. The firms 2013 expected annual capacity is $78,000 directlabor hours, to be incurred evenly each month. Making one unit ofthe company product requires 1.5 direct labor hours.a. Determine the total overhead to be applied per unit of productin 2013.b. Prepare journal entries to record the application of overhead toWork in process inventory and the incurrence of $128,550 of actualoverhead in January 2013, when 6,390 direct labor hours wereworked.c. Given the actual direct labor hours in (b), how many units wouldyou have expected to be produced in January. (Under applied or over applied overhead) At the end of 2013,Jackson Tank Companys account showed a $66,000 credit balance inmanufacturing overhead control. In addition, the company had thefollowing account balances:Work in process inventory $384,000Finished Goods Inventory $96,000Cost of good sold $720,000a. Prepare the necessary journal entry to close the overheadaccount if the balance is considered immaterial.b. Prepare the necessary journal entry to close the overheadaccount if the balance is considered material.c. Which method do you believe in more appropriate for the company,and why? (Underapplied or overapplied overhead) At the end of 2013, Dubswind generator co. had a $40,000 debit balance in its manufacturingoverhead control account. Overhead is applied to products based ondirect labor cost. Relevant account balance information at year endfollows: Work in process inventory finishedinventory cost of goods soldDirect material $20,000 $80,000 $120,000Direct labor $10,000 $40,000 50.000Factory overhead 20,000 80,000 100,000Total 50,000 200,000 270,000 a. What predetermined OH rate was used during the year?b. Provide arguments to be used for deciding whether to prorate thebalance in the overhead account at the year endc. Prorate the overhead account balance based on te relativebalances of the appropriate accountsd. Identiy some possible reasons that the company had a debitbalance in the overhead account at the end of the year.
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