Question

Print Item Predetermined Departmental Overhead Rates, Applying Overhead to Production At the beginning of the year, Hallett Company estimated the following: Cutting Department Overhead Total $240,000 Sewing Department $350,000 100,000 $590,000 Direct labor hours Machine hours 31,200 131,200 150,000 150,000 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: Cutting Department Sewing Department Total Overhead $20,610 $35,750 $56,360 Direct labor hours 2,800 8,600 11,400 13,640 Machine hours 13,640 Required: 1. Calculate the predetermined overhead rates for the cutting and sewing departments. Round your answers to the nearest cent. per machine hour Cutting department overhead rate per direct labor hour Sewing department overhead rate 2. Calculate the overhead applied to production in each department for the month of June. Check My Work Save and Exit Submit Agent for 607 PM

Answer 1

Solutions:

Computation of Departmental predetermined Overhead Rate
	Cutting	Sewing
Overhead costs	$2,40,000	$3,50,000
/ Machine Hours	150000
/ Direct labor hours		100000
Departmental Overhead Rate	$1.60	$3.50
Computation of Overhead applied
	Cutting	Sewing
Machine Hours used	13640
Direct labor Hours used		8600
*Departmental Overhead rate	$1.60	$3.50
Overhead applied	$21,824	$30,100
Computation of Overapplied/ underapplied overhead
	Cutting	Sewing
Actual Overhead incurred	$20,610	$35,750
Applied Overhead	$21,824	$30,100
Difference overhead	$1,214	$5,650
	Overapplied	Underapplied