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Underapplied and Overapplied Overhead San Antonio Welding Company applies factor

ID: 2427782 • Letter: U

Question

Underapplied and Overapplied Overhead

San Antonio Welding Company applies factory overhead at a rate of $8.20 per direct-labor hour. Selected data for 20X0 operations are as follows (in thousands):

Case 1  

Case 2  

Direct-labor hours

25

35

Direct-labor cost

$224

$250

Indirect-labor cost

29

43

Sales commissions

22

10

Depreciation, manufacturing equipment

16

33

Direct-materials cost

228

247

Factory fuel costs

36

49

Depreciation, finished-goods warehouse

8

19

Cost of goods sold

415

505

All other factory costs

137

207

1. factory overhead applied.

2. total factory overhead incurred.

3. amount of underapplied or overapplied factory overhead.

Case 1  

Case 2  

Direct-labor hours

25

35

Direct-labor cost

$224

$250

Indirect-labor cost

29

43

Sales commissions

22

10

Depreciation, manufacturing equipment

16

33

Direct-materials cost

228

247

Factory fuel costs

36

49

Depreciation, finished-goods warehouse

8

19

Cost of goods sold

415

505

All other factory costs

137

207

Explanation / Answer

Total direct labor = 25+35 = 60 hours

hence facotry overhead applied = 60*$8.20 = $492

total facotry overhead incurred

1) indirect labor cost                    = $72

2)Depreciation, manufactuirng   =    $49

3)Facotry fuel cost                      =    $85

4)All other factory cost               =    344

total overhead                            = $550

Total direct labor = 25+35 = 60 hours

hence facotry overhead applied = 60*$8.20 = $492

total facotry overhead incurred

1) indirect labor cost                    = $72

2)Depreciation, manufactuirng   =    $49

3)Facotry fuel cost                      =    $85

4)All other factory cost               =    344

total overhead                            = $550

c)Factory overhead underapplied = $550 -$492 = $58