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In: Accounting

A. Savings Trust uses bankwide overhead rates to allocate $396,000 of indirect costs. The bankwide rate...

A. Savings Trust uses bankwide overhead rates to allocate $396,000 of indirect costs. The bankwide rate could be based on either direct labor hours (DLH) or the number of loans processed. The following information was gathered for the upcoming period:

Department

DLH

Loans Processed

Direct Costs

Consumer

14,000

700

$

280,000

Commercial

8,000

300

$

180,000
  1. What would be the rate based on direct labor hour?
  2. What would be the rate based on number of loans processed?
  3. If Savings uses a rate based on direct labor hours, how much overhead will be allocated to the Consumer department?
  4. If Savings uses a rate based on number of loans processed, how much overhead will be allocated to the Consumer department.

B.

Foster Corporation applies overhead using a normal costing approach based upon machine-hours. Budgeted factory overhead was $266,400, budgeted machine-hours were 18,500. Actual factory overhead was $287,920, actual machine-hours were 19,050. How much is the over- or underapplied overhead? Be sure to say whether overhead is overapplied or underapplied.

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ekkarill92 answered 2 years ago
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