During 2010, Arb Company incurred the following direct labor costs: January $15,000 and February $30,000. Arb uses a predetermined overhead rate of 120% of direct labor cost. Estimated overhead for the 2 months, respectively, totaled $19,500 and $35,700. Actual overhead for the 2 months, respectively, totaled $18,400 and $32,500.
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 2010, Arb Company incurred the following direct labor costs: January $15,000 and February $30,000. Arb uses a predetermined overhead rate of 120% of direct labor cost. Estimated overhead for the 2 months, respectively, totaled $19,500 and $35,700. Actual overhead for the 2 months, respectively, totaled $18,400 and $32,500.
Instructions
Determine if overhead is over- or underapplied for each of the two months and the respective amounts.

During 2010, Arb Company Incurred the Following Direct Labor Costs