During March 2019, Annapolis Corporation recorded $44,000 of costs related to factory overhead. Alpha's overhead application rate is based on direct labor hours. The preset formula for overhead application estimated that $43,300 would be incurred, and 5,000 direct labor hours would be worked. During March, 6,250 hours were actually worked. Use this information to determine the amount of factory overhead that was (over) or under applied. (Round answers to the nearest whole dollar. Enter as a positive number if under applied. Enter as a negative number if over applied.)
Predetermined overhead rate = Estimated overhead / estimated direct labor hours
= $ 43,300 / 5,000 direct labor hours
= $ 8.66 per direct labor hour
Applied Overhead = Predetermined overhead rate * Actual direct labor hours
= $ 8.66 per direct labor hour * 6,250 hours
= $ 54,125
Actual Overhead = $ 44,000
Since the Actual Overhead is less than the applied overhead, the factory overhead that was over applied.
The over applied overhead = Applied Overhead - Actual Overhead
= $ 54,125 - $ 44,000
= $ 10,125
Answer : - $ 10,125
Get Answers For Free
Most questions answered within 1 hours.