Question

The following data is provided for ABC company budgeted overhead for the year is $400,000 projected...

The following data is provided for ABC company

budgeted overhead for the year is $400,000

projected direct labor cost for the year -$100,000

eduring tstimated machine hours for the year -20,000

estimated direct labor hours for the year -20,000

overhead is applied to product based on direct labor costs,

during the month of june the company incurred 3000 labor hours used 2500 machine hours incurred #30,000 of labor costs and $75,000 of overhead cost

calculate

a. the overhead cost

b. the amount of overhead applied in june

c, the over or underapplied overhead for june and explain what it means

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Answer #1
Budgeted Overhead = $400,000
projected direct labor cost 100000
Estimated MHRS 20000 hrs
Estimed DL hrs 20000 hrs
a) Actual Overhead Cost = $75000
b) Amount of applied overhead
Predetermined Overhead rate per labour hr = Budgeted Overhead/Estimated DL Hrs
= $400000/20000 hrs
$20 per DL hr
Applied Overhead= Actual DL hrs worked*Predetermined overhead rate
= 3000 hrs * $20
$ 60,000.00
c) Actual Overhead 75000
Applied Overhead 60000
Underapplied Overhead 15000
This means, the appliedoverhead is less than the actual overhead incurred by thecompay
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