Answer:
Primera Company
1. Plantwide predetermined overhead rate:
= $1,536,000/768,000
= $2.00 per direct labor hour
Overhead assigned to each product:
                                    Product 1    Product 2 
Direct labor hours     480,000        147,200
Predetermined overhead
  rate  = $2 per direct labor hour
Total overhead =    $960,000    $294,400
2. Predetermined departmental overhead rates:
Department 1:    
Direct labor hours $2 ($1,536,000/768,000) 
Department 2 
Machine hours = $7.385 ($1,536,000/208,000)
Overhead assigned:
Product 1 = $960,000 (480,000 * $2)
Product 2 = $70,896 (9,600 * $7.385)
3. The applied overhead for the year:
Department 1 = $1,254,400 (627,200 * $2)
Department 2 = $1,512,448 (204,800 * $7.385)
Total   =            $2,766,848
Overapplied overhead for the firm = $1,134,848 ($2,766,848 - $1,632,000)
4. Debit Manufacturing overhead $1,134,848
Credit Cost of goods sold $1,134,848
To transfer the overapplied overhead to cost of goods sold.
Additional information needed if the variance is material is to determine the percentages to allocated to Work in process, Finished Goods, and Cost of Goods Sold.
Explanation:
a) Data and Calculations:
Estimates:
                             Department 1   Department 2      Total  
Direct labor hours    640,000            128,000        768,000
Machine hours            16,000            192,000        208,000
Overhead cost       $384,000       $1,152,000    $1,536,000
Actual results:
                             Department 1   Department 2      Total  
Direct labor hours     627,200             134,400       761,600
Machine hours             17,600            204,800      222,400
Overhead cost       $400,000       $1,232,000  $1,632,000
                        Product 1 Product 2        Total  
Direct labor hours:
Department 1 480,000    147,200      627,200
Department 2  96,000     38,400       134,400
Machine hours:
Department 1    8,000        9,600         17,600
Department 2 24,800    180,000      204,800