Cardella Company applies overhead on the basis of direct labor costs. The company estimates annual overhead costs will be $760,000, and annual direct labor costs will be $950,000. During February, Cardella works on two jobs: A16 and B17. Summary data concerning these jobs are as follows.

Manufacturing Costs Incurred

Purchased $54,000 of raw materials on account.

Factory labor $76,000, plus $4,000 employer payroll taxes.

Manufacturing overhead exclusive of indirect materials and indirect labor $59,800.

Assignment of Costs

Direct materials:

Job A16 $27,000, Job B17 $21,000

Indirect materials:

$3,000

Direct labor:

Job A16 $52,000, Job B17 $26,000

Indirect labor:

$2,000

The company completed Job A16 and sold it on account for $150,000. Job B17 was only partially completed.

Instructions

(a)Compute the predetermined overhead rate.

(b)Journalize the February transactions in the sequence followed in the chapter.

(c)What was the amount of under- or overapplied manufacturing overhead?