Verizox Company uses a job order cost system with manufacturing overhead applied to products based on direct labor hours. At the beginning of the most recent year, the company estimated its manufacturing overhead cost at $195,940. Estimated direct labor cost was $465,600 for 19,400 hours.
Actual costs for the most recent month are summarized
|Item Description||Total Cost|
|Direct labor (1,940 hours)||$||46,561|
|Factory janitorial work||1,210|
|General and administrative salaries||4,140|
1. Calculate the predetermined overhead rate.
2. Calculate the amount of applied manufacturing overhead.
3. Calculate actual manufacturing overhead costs.
4. Compute over- or underapplied
1. Predetermined overhead rate = Estimated manufacturing overhead/ Estimated no of hours
2. Applied manufacturing overhead = 1,940×$10.1 =$19,594
3. Actual manufacturing overhead
|Factory janitorial work||$1,210|
|Actual manufacturing overhead||$22,590|
Actual manufacturing overhead =$22,590
Applied overhead =$19,594
Overhead Underapplied =$2,996($22,590-$19,594)
Get Answers For Free
Most questions answered within 1 hours.