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Technics Inc

Accounting

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Technics Inc., a manufacturing company, utilizes job order costing. Each division establishes its own estimates regarding overhead which are as follows: Division A Division B Total estimated overhead $128,000 $261,000 Total estimated machine hours 16,000 72,500 Total estimated direct labor hours 10,000 15,000 Total actual overhead $130,000 $250,000 Total actual machine hours 17,000 25,000 Total actual direct labor hours 18,000 14,000 Division A allocates overhead on the basis of machine hours Division B allocates overhead on the basis of direct labor costs Required: For Division A and Division B, a. Calculate the overhead application rate for the year. (3 marks) b. What is the amount of applied overhead for the year? (3 marks) c. What is the amount of under or overapplied overhead for the year? Indicate whether it is over- or underapplied