In Crawford Company, the predetermined overhead rate is 80% of direct labor cost. During the month,...

In Crawford Company, the predetermined overhead rate is 80% of direct labor cost. During the month, Crawford incurs $210,000 of factory labor costs, of which $180,000 is direct labor and $30,000 is indirect labor. Actual overhead incurred was $200,000. The amount that the overhead applied was overapplied or underapplied was:

Group of answer choices

$56,000 overapplied

$32,000 overapplied

$56,000 underapplied

$32,000 underapplied

Expert Solution

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Correct option is: C. $56,000 Underapplied

Workings:
Predetermined overhead rate	=	80% of direct labor cost

Applied overheads	=	$180000 X 80%
	=	$ 1,44,000

Actual overheads incurred	=	$ 2,00,000

Underapplied overheads	=	$200000 - $144000
	=	$ 56,000

Therefore, Underapplied overheads are $56000

ekkarill92 answered 2 years ago

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