During 2016 Arb Company incurred the following direct labor costs: January $20000 and February $30000. Arb uses a predetermined overhead rate of 120% of direct labor cost. Estimated overhead for the 2 months respectively totaled $19500 and $35700. Actual overhead for the 2 months respectively totaled $25000 and $33500.
Instructions
Determine if overhead is over- or underapplied for each of the two months and the respective amounts.

Question

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The Answer of During 2016 Arb Company incurred the following direct labor costs: January $20000 and February $30000. Arb uses a predetermined overhead rate of 120% of direct labor cost. Estimated overhead for the 2 months respectively totaled $19500 and $35700. Actual overhead for the 2 months respectively totaled $25000 and $33500.
Instructions
Determine if overhead is over- or underapplied for each of the two months and the respective amounts.

During 2016 Arb Company Incurred the Following Direct Labor Costs