Question

In: Accounting

Overhead Calculations

Calculate the required overhead and decide whether the overhead has been overapplied or underapplied.

Expert Solution

Question 1:

Estimated number of operating room hours for the year = Number of operating hours in a day x Operating days in week x Number of operating weeks

= 8 x 7 x ( 52-2)

= 2,800

Predetermined overhead rate = Estimated overheads/Estimated operating room hours

= $ 560,000 / 2,800

= $ 200 / hour

Question 2.

Overhead applied = Actual operating room hours used x Predetermined overhead rate

= 4 x $ 200

= $ 800

Question 3.

Overhead applied in January = Actual operating room hours used x Predetermined overhead rate

= 194 x $ 200

= $ 38,800

Actual overheads = $ 37,900

Over applied overhead = Overhead applied - Actual overhead

= $ 38,800 - $ 37,900

= $ 900 overapplied

Q1: $200/hour

Q2: $800

Q3: $900 overapplied

Soumik Mallick Choudhury answered 2 years ago

Overhead Calculations and Allocations

Overhead Calculations using different methods and inspecting price differences due to the different methods applied.

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