Question

A manufacturing firm uses a single plant-wide overhead allocation rate for overhead. It was established at the beginning of the period that the overhead rate used for allocation to jobs was $18.65 per direct labor hour. During the period, 15776 direct labor hours where actually worked. The company incurred actual overhead of $278767 during the period.

Required: Determine how much overhead was either overapplied or underapplied during the period. If overhead was underapplied during the period, enter you answer as a credit (negative number), if overapplied, enter as a debit (positive number).

Answer 1

a.	Applied overhead		=	Actual direct labor hours*overhead rate
			=	15776*$18.65
			=	$       2,94,222
b.	Overapplied overhead			$ 15,455
	Working:
	Appplied Overhead			$       2,94,222
	Actual Overhead			$       2,78,767
	Overapplied overhead			$           15,455
	Applied overhead is more than actual.So, Overhead is overapplied.