Question

# Convert Departmental Data to Plantwide Data, Plantwide Overhead Rate, Apply Overhead to Production At the beginning...

Convert Departmental Data to Plantwide Data, Plantwide Overhead Rate, Apply Overhead to Production

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

 Cutting Department Sewing Department Total Overhead \$240,000 \$350,000 \$590,000 Direct labor hours 31,200 100,000 131,200 Machine hours 150,000 — 150,000

Assume that Hallett has decided to use a plantwide overhead rate based on direct labor hours. Actual data for the month of June are as follows:

 Cutting Department Sewing Department Total Overhead \$20,610 \$35,750 \$56,360 Direct labor hours 2,800 8,600 11,400 Machine hours 13,640 — 13,640

Required:

\$ per direct labor hour

2. Calculate the overhead applied to production for the month of June.
\$

3. Calculate the overhead variance for the month of June.
\$

 1 Plantwide overhead rate = Total Overhead / Direct Labor Hours = \$56,360 / 11,400 = \$4.94 per direct labor hour 2 Applied Overhead = Plantwide overhead rate x Actual activity level = \$4.94 x 13,640 = \$67,381.60 3 Over or Underapplied Overhead = Actual Overhead - Applied Overhead = \$56,360 - \$67,381.60 = \$11,021.60 Overapplied