Question

Carera Corporation uses a predetermined overhead rate of $23.70 per direct labour-hour. This predetermined rate was based on 13,700 estimated direct labour-hours and $324,690 of estimated total manufacturing overhead.

The company incurred actual total manufacturing overhead costs of $309,260 and 14,300 total direct labour-hours during the period.

Required:

Determine the amount of manufacturing overhead applied to units of product during the period as well as the amount of over- or underapplied overhead for the period.

Answer 1

Solution

Overheads Applied	$ 338,910
Overheads Overapplied	$ 29,650

Working

(A)	Budgeted Manufacturing Overheads	$ 324,690
(B)	Budgeted Direct labor hours	13,700
C= (A/B)	Predetermined Overhead rate	$ 23.70
(D)	Actual Direct labor hours	14,300
E=(DxC)	Overheads Applied	$ 338,910
(F)	Actual Overheads	$ 309,260
G=(F-E)	Overheads Overapplied	$ 29,650