Predetermined Departmental Overhead Rates, Applying Overhead to Production At the beginning of the year, Hallett Company...

Predetermined Departmental Overhead Rates, Applying Overhead to Production

At the beginning of the year, Hallett Company estimated the following:

	Cutting Department	Sewing Department	Total
Overhead	$240,000	$350,000	$590,000
Direct labor hours	31,200	99,900	131,100
Machine hours	150,000	—	150,000

Hallett uses departmental overhead rates. In the cutting department, overhead is applied on the basis of machine hours. In the sewing department, overhead is applied on the basis of direct labor hours. Actual data for the month of June are as follows:

	Cutting Department	Sewing Department	Total
Overhead	$20,610	$35,750	$56,360
Direct labor hours	2,800	8,600	11,400
Machine hours	13,640	—	13,640

Required:

1. Calculate the predetermined overhead rates for the cutting and sewing departments. Round your answers to the nearest cent.

Cutting department	$ per machine hour
Sewing department	$ per direct labor hour

2. Calculate the overhead applied to production in each department for the month of June. Use overhead application rates that are rounded to the nearest cent in your calculations, and round your final answers to the nearest dollar.

Cutting department	$
Sewing department	$

3. By how much has each department's overhead been overapplied or underapplied?

Cutting department	$
Sewing department	$

Solutions

Expert Solution

1. Computation of Predetermined Overhead Rate
Particular	Cutting Department	Sewing Department
Overhead Cost (A)	$240,000.00	$350,000.00
Direct Labor Hours (B)		99900
Machine Hours (B)	150000
Predetermined Overhead Rate (A/B)	$1.60	$3.50

2. Computation of Overhead Assigned to product.
	Cutting Department	Sewing Department

Driver (a)	13640 Machine Hour	8600 DLH
Predetermined Overhead Rate (as Calculated above) (b)	$1.60 per MH	$3.50 per DLH
Applied Overhead cost (aXb)	$21,824.00	$30,100.00

3. Computation of Oveerhead under Applied or overapplied
	Cutting Department	Sewing Department
Applied Overhead	$21,824.00	$30,100.00
Actual Overhead	$20,610.00	$35,750.00
Under Applied		$5,650.00
Overapplied	$1,214.00

ekkarill92 answered 1 year ago

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