Question

# Calculating Departmental Overhead Rates and Applying Overhead to Production At the beginning of the year, Glaser...

At the beginning of the year, Glaser Company estimated the following:

 Assembly Department Testing Department Total Overhead \$338,000 \$630,000 \$968,000 Direct labor hours 130,000 40,000 170,000 Machine hours 45,000 120,000 165,000

Glaser uses departmental overhead rates. In the assembly department, overhead is applied on the basis of direct labor hours. In the testing department, overhead is applied on the basis of machine hours. Actual data for the month of March are as follows:

 Assembly Department Testing Department Total Overhead \$29,850 \$58,000 \$87,850 Direct labor hours 11,700 3,450 15,150 Machine hours 4,100 10,900 15,000

Required:

1. Calculate the predetermined overhead rates for the assembly and testing departments. Round your answers to the nearest cent.

 Assembly department overhead rate \$ per direct labor hour Testing department overhead rate \$ per machine hour

2. Calculate the overhead applied to production in each department for the month of March.

 Assembly department \$ Testing department \$

3. By how much has each department's overhead been overapplied? Underapplied?

 Assembly department Overapplied \$ Testing department Underapplied \$

 Overhead Allocation base Total Allocation base Overhead rate 1 Assembly Department \$338,000 DLHs 130,000 \$2.60 Per DLHs Testing Department \$630,000 MHs 120,000 \$5.25 Per MHs 2 Assembly Department \$30,420 (11,700 x \$2.60 DLHs) Testing Department \$57,225 (10,900 x \$5.25 MHs) 3 Assembly department Overapplied \$570 Testing department Underapplied \$775

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