1.

Johnson Corporation (a television company) uses a predeterminedoverhead rate based on direct labor-hours to apply manufacturingoverhead to jobs. The Corporation has provided the followingestimated costs for the next year:

Direct materials	$	20,000
Direct labor	$	15,000
Rent on factory building	$	25,000
Sales salaries	$	30,000
Depreciation on factory equipment	$	10,000
Indirect labor	$	20,000
Production supervisor's salary	$	10,000

Johnson Corporation estimates that 40,000 direct labor-hourswill be worked during the year to produce televisions. Thepredetermined overhead rate per hour will be: __________.

2. Zhao Corporation has two production departments, Casting andCustomizing. The company uses a job-order costing system andcomputes a predetermined overhead (OH) rate in each productiondepartment. The Casting Department's predetermined overhead rate isbased on machine-hours and the Customizing Department'spredetermined overhead rate is based on direct labor-hours. At thebeginning of the current year, the company had made the followingestimates:

	Casting		Customizing
Machine-hours		20,000		10,000
Direct labor-hours		5,000		15,000
Total fixed manufacturing overhead cost	$	175,000	$	70,000
Variable manufacturing OH per machine-hour	$	3.00
Variable manufacturing OH per direct labor-hour			$	5.00

During the current month the company started and finished acustom engagement ring. The following data were recorded for thisring:

	Casting		Customizing
Machine-hours	50		15
Direct labor-hours	5		30

The amount of overhead applied in the Customizing Department tothe custom engagement ring is closest to: ___________.

3. Anderson Corporation had $50,000 of raw materials on hand onAugust 1. During the month, the Corporation purchased an additional$75,000 of raw materials and applied $60,000 materials to jobs.Journalize the entries for these transactions.

4. Prepare the journal entry for the over or underappliedoverhead depicted in this account below. The company closesoverhead out to Cost of Goods Sold. Also indicate whether grossmargin will be increased or decreased by this entry.

Manufacturing Overhead

(2) 9,000	(2) 167,000
(3) 15,000
(4) 80,000
(5) 30,000
(6) 25,000
159,000	167,000
	Balance: 8,000