Easy Decorating uses a job order costing system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year.
- Budgeted overhead $960,000
- Actual overhead $982,800
- Budgeted decorator hours 40,000
- Actual decorator hours 40,500
The company uses Operating Overhead in place of Manufacturing Overhead.
- Prepare the entry to apply the overhead for the year.
- Determine whether the overhead was under- or overapplied and by how much.