A company expected its annual overhead costs to be $15,000 and direct labor costs to be...

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A company expected its annual overhead costs to be $15,000 and direct labor costs to be...

A company expected its annual overhead costs to be $15,000 and direct labor costs to be $10,000. Actual overhead was $14,000, and actual labor costs totaled $11,000. Calculate predetermined overhead rate, amount of applied overhead and state whether it results in under applied or over applied.

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Answer 1

Answer #1

1.)	Predetermined Overhead rate	150%	of Direct labor Cost	=15000/10000
	(Expected Overhead cost / Expected direct labor cost )


2.)	Amount of applied overhead	$ 16,500	=11000*150%


3.)	Applied Overhead	16,500
	Less: Actual Overhead	14,000
	Overapplied Overhead	$ 2,500

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Answer 2

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