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Homework answers / question archive / During 2020, Vaughn Manufacturing expected Job 59 to cost $276000 of overhead, $507000 of material, and $200000 in labour
During 2020, Vaughn Manufacturing expected Job 59 to cost $276000 of overhead, $507000 of material, and $200000 in labour. Vaughn applied overhead based on direct labour cost. Actual production required an overhead cost of $265000, $551000 in materials used; and $240000 in labour. All of the goods were completed. How much is the amount of over-/under-applied overhead?
a. $66200 under-applied b. $66200 over-applied c. $11000 under-applied d. $11000 over-applied
Answer
b.
Explanation
Computation of Under or Over Applied Overhead:
Overhead Rate = Estimated Overheads / Estimated Direct Labor Hour
= ($276,000 / $200,000) * 100
= 138% of Direct Labor Cost
Overheads Applied = $265,000
Actual Overhead ($240,000*138%) = $331,200
Over-applied Overhead ($331,200-$265,000) = $66,200
