Question

ackson Inc. listed the following data for 2016:

Budgeted factory overhead	$1,271,000
Budgeted direct labor hours	82,000
Budgeted machine hours	41,000
Actual factory overhead	1,201,000
Actual direct labor hours	86,300
Actual machine hours	39,400
Round calculations to 2 significant digits

If overhead is applied based on direct labor hours, overapplied/underapplied overhead is:

		$136,650 overapplied.
		$136,650 underapplied.
		$174,775 underapplied.
		$174,775 overapplied.
		$-0-.

Sutherland Company listed the following data for 2016:

Budgeted factory overhead	$2,100,000
Budgeted direct labor hours	89,000
Budgeted machine hours	51,000
Actual factory overhead	2,201,000
Actual direct labor hours	83,700
Actual machine hours	48,900
Round calculations to two significant digits

Assuming Sutherland applied overhead based on machine hours, the company's predetermined overhead rate for 2016 is (round to two significant digits):

		$44.00 per machine hour.
		$41.98 per machine hour.
		$38.31 per machine hour.
		$35.90 per machine hour.
		$41.18 per machine hour.

Answer 1

Dear student, only one question is allowed at a time. I am answering the first question

Overhead absorption rate

= Budgeted overhead / Budgeted direct labor hours

= $1,271,000 / 82,000

= $15.5 per direct labor hour

Applied overhead

= Actual Direct labor hours x Overhead absorption rate

= 86,300 x $15.50

= $1,337,650

Since actual overhead is less than overhead applied, overhead is over applied in the present case

Over applied overhead

= Applied overhead – Actual overhead

= $1,337,650 – $1,201,000

= $136,650

So, as per above calculations, option A is the correct option