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Tahoma Corporation: Application of Overhead

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The following calendar year information about the Tahoma Corporation is available on December 31:
[See the attached file]

The company applies overhead on the basis of 125% of direct labor costs.

a. Calculate the amount of over- or under-applied overhead.
b. What is the significance of this over- or under-applied amount of overhead?

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Your tutorial is in the Excel, attached, and shows the process for finding over and under applied.

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The following calendar year information about the Tahoma Corporation is available on December 31:

Advertising $28,800
Depr, factory equip $42,320
Depr, office equip $10,800
Direct labor $142,600
Factory utilities $35,650
Interest exp $6,650
Inventory, beg Jan 1
DM $3,450 ...

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Carol Sargent, PhD
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  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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