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

  1. Calculating Departmental Overhead Rates and Applying Overhead to Production

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

    Assembly
    Department    		 Testing
    Department
    Total
    Overhead $413,000 $425,390 $838,390
    Direct labor hours 76,500 68,850 145,350
    Machine hours 114,500 131,675 246,175

    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 $57,820 $59,555 $117,375
    Direct labor hours 10,710 9,639 20,349
    Machine hours 16,030 18,435 34,465

    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. If required, round your answers to nearest whole value.

    Assembly department $
    Testing department $

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

    Assembly department $
    Testing department $
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Answer #1

1.

Computation of overhead rate for Each department
Particulars Assembly Testing
Budgeted Manufacturing Overhead $4,13,000 $4,25,390
/Budgeted direct labor Hours 76500
/Budgeted Machine Hours 131675
Overhead rate of department $5.40 $3.23

2.

Computation of overhead applied to Each department
Particulars Assembly Testing
Actual Direct labor Hours 10710
Actual Machine Hours 18435
/Overhead rate of department $5.40 $3.23
Overhead applied $57,834 $59,545

3.

Computation of under/over applied overhead to Each department
Particulars Assembly Testing
Overhead applied $57,834 $59,545
Actual Overhead incurred $57,820 $59,555
Differencial overhead $14 $10
Overapplied Underapplied
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