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

Question

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

Hallett uses departmental overhead rates. In the cutting department, overhead is applied on the basis of machine hours. In the sewing department, overhead is applied on the basis of direct labor hours. Actual data for the month of June are as follows:

13,640

1. Calculate the predetermined overhead rates for the cutting and sewing departments. Round your answers to the nearest cent.

2. Calculate the overhead applied to production in each department for the month of June.

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

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

Explanation / Answer

1. Cutting department overhead rate $1.6 per machine hour. (240,000/150000), Sewing department overhead rate $3.5 per direct labour hr (350,000/100000)

2. overhead applied to cutting in june is $21824 (13640*1.6), overhead applied to sewing in june is $30100 (8600*3.5)

3 Cutting Department Overhead Variance =20610-21824=1214$(overapplied), Sewing Department Overhead Variance=35750-30100=5650$(underapplied)

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