Silo's Company uses a predeterminated overhead rate based on labor-hours to apply manufacturing overhead to jobs. Estimate and actual data for direct labor and manufacturing overhead for last year are as follows:
Direct Labor Hours.............600,000 550,000
Manufacturing overhead .......$720,000 $680,000
The manufacturing overhead for Silo's Company for last year was:
a) underapplied by $40,000
b) overapplied by $20,000
c) overapplied by $40,000
d) underapplied by $20,000
Calculation are as follows:
720,000 - 680,000 = $40,000
I would like to know if $40,000 is overapplied or underapplied and if the calculations above are correct.
Thanks in advance.© BrainMass Inc. brainmass.com June 3, 2020, 9:10 pm ad1c9bdddf
Based on estimate, overhead rate per $ of labor = 720,000/600,000 = ...