The following data pertain to the Aquarius Hotel Supply Company for the year just ended.
Budgeted sales revenue $ 945,000
Budgeted manufacturing overhead 650,000
Budgeted machine hours (based on practical capacity) 20,000
Budgeted direct-labor hours (based on practical capacity) 25,000
Budgeted direct-labor rate per hour 13
Actual manufacturing overhead 690,000
Actual machine hours 22,000
Actual direct-labor hours 26,000
Actual direct-labor rate per hour 14
Compute the firm’s predetermined overhead rate for the year using each of the following common cost drivers: (Round your answers to 2 decimal place.)

Machine Hour__________per machie hour

Direct Labor hours_per direct labor hour

Direct labor dollars_________per direct labor dollar

Calculate the overapplied or underapplied overhead for the year using each of the following cost drivers

Machine hours

Direct Labor hours

Direct labor dollars

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hyderali230 hyderali230 · Answer 1 · 2020-02-20T11:26:41+01:00

Answer:

Predetermined rate

$32.50 per machine hour

$26 per direct labor hour

50,000 hours per direct labor dollar

Over / under applied:

Over Applied Overheaed using machine hours = $25,000

Under Applied Overheaed using direct labor hours = -$14,000

Over Applied Overheaed using direct labor dollar = $10,000

Explanation:

Predetermined rate

Predetermined overhead rate = Budgeted Manufacturing overhead / Budgeted Machine Hours

Predetermined overhead rate = 650,000 / 20,000 = $32.5 per machine hour

Predetermined overhead rate = Budgeted Manufacturing overhead / Budgeted direct labor Hours

Predetermined overhead rate = 650,000 / 25,000 = $26 per direct labor

Predetermined overhead rate = Budgeted Manufacturing overhead / Direct labor rate

Predetermined overhead rate = 650,000 / 13 = 50,000 hours

Applied overhead:

Applied Overheaed using machine hours = 32.50 x 22,000 = $715,000

Applied Overheaed using direct labor hours = 26 x 26,000 = $676,000

Applied Overheaed using direct labor dollar = 50,000 x 14 = $700,000

Under / Over applied Overheads:

Over Applied Overheaed using machine hours = $715,000 - 690,000 = $25,000

Under Applied Overheaed using direct labor hours = 676,000 - 690,000 = -$14,000

Over Applied Overheaed using direct labor dollar = 700,000 - 690,000 = $10,000