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MMM (Mickey Mouse Manufacturing) applies manufacturing overhead at a rate of 150% of direct labor cost....

MMM (Mickey Mouse Manufacturing) applies manufacturing overhead at a rate of 150% of direct labor cost. During October MMM incurred $40,000 of direct materials cost, $80,000 of direct labor cost and $120,000 of manufacturing overhead costs. What is the amount of over or under applied manufacturing overhead for October?

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Expert Solution

Predetermined overhead rate = 150% of direct labor cost

Direct labor cost = $80,000

Manufacturing overhead applied = Direct labor cost x Predetermined overhead rate

= 80,000 x 150%

= $120,000

Actual manufacturing overhead = $120,000

Since manufacturing overhead applied is same as actual manufacturing overhead, hence there is no under applied or over applied manufacturing overhead.

ekkarill92 answered 2 years ago
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