A manufacturing firm uses a single plant-wide overhead allocation rate for overh

Question

A manufacturing firm uses a single plant-wide overhead allocation rate for overhead. It was established at the beginning of the period that the overhead rate used for allocation to jobs was $18.65 per direct labor hour. During the period, 15776 direct labor hours where actually worked. The company incurred actual overhead of $278767 during the period.

Required: Determine how much overhead was either overapplied or underapplied during the period. If overhead was underapplied during the period, enter you answer as a credit (negative number), if overapplied, enter as a debit (positive number).

Explanation / Answer

a. Applied overhead = Actual direct labor hours*overhead rate = 15776*$18.65 = $       2,94,222 b. Overapplied overhead $ 15,455 Working: Appplied Overhead $       2,94,222 Actual Overhead $       2,78,767 Overapplied overhead $           15,455 Applied overhead is more than actual.So, Overhead is overapplied.

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