Colby Company estimates that annual manufacturing overhead costs
will be $600,000. Estimated annual operating activity bases are:
direct labor cost $460,000, direct labor hours 40,000 and machine
hours 80,000. The actual manufacturing overhead cost for the year
was $601,000 and the actual direct labor cost for the year was
$456,000. Actual direct labor hours totaled 39,800 and machine
hours totaled 79,000. Colby applies overhead based on direct labor
Compute the predetermined overhead rate and determine the amount of manufacturing overhead applied. Determine if overhead is over- or underapplied and the amount.
|Overhead rate||$||per direct labor hour|
Underapplied or Overapplied
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