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During March 2019, Alaska Corporation recorded $236,000 of costs related to factory overhead.  Alaska's overhead application rate...

During March 2019, Alaska Corporation recorded $236,000 of costs related to factory overhead.  Alaska's overhead application rate is based on direct labor hours. The preset formula for overhead application estimated that $250,000 would be incurred, and 12,500 direct labor hours would be worked.  During March, 13,300 hours were actually worked. Use this information to determine the amount of overhead over or under applied.  Enter overapplied overhead as a negative number. (round & enter any final dollar answers to the nearest whole dollar)

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Working Notes:
CACLULATION OF OVERHEAD APPLICATION RATE PER LABOR HOURS
Overhead Application Rate = Budgeted Overhead Cost   "/" Estimated Direct Labor Hours   "=" Estimated Overhead rate PER Labor Hrs
Overhead Application Rate = $                       250,000 "/"                        12,500 "=" $                     20.00
Solution:
CALCULATION OF TOTAL OVERHEAD APPLIED
Applied Ovehead              = Labor Hours Used   "X" Rate Per Hours "=" Overhead Cost Applied
Applied Ovehead              =                             13,300 "X" $                      20.00 "=" $                266,000
Applied Ovehead              = "=" $                 266,000
Actual Overhead incurred     = $                       236,000
Less: Overhead Applied $                       266,000
Overapplied Overhead $                       (30,000)
Answer = Overapplied Overhead = $ (30,000)

ekkarill92 answered 1 year ago
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