The cost accountant of a newly formed company was asked to establish a predetermined rate for applying overhead to the job moving through a single manufacturing shop and to check results periodically....

The cost accountant of a newly formed company was asked to establish a predetermined rate for applying overhead to the job moving through a single manufacturing shop and to check results periodically. After consulting various departments, he collated the following estimated data for the current year:

At the end of current year, the first year of operations, the actual results were recorded against each item above. You are required to:

(a) Compute the predetermined overhead rate, based on direct labour-hours; also compute the incurred overhead rate;

(b) Determine the under or over-applied overhead for the year.