Jackson Inc. listed the following data for 2019:$\begin{array}{lr}
\text { Budgeted factory overhead } & \$ 1,271,000 \
\text { Budgeted direct labor hours } & 82,000 \
\text { Budgeted machine hours } & 41,000 \
\text { Actual factory overhead } & 1,201,000 \
\text { Actual direct labor hours } & 86,300 \
\text { Actual machine hours } & 39,400
\end{array}$If overhead is applied based on direct labor hours, overapplied/underapplied overhead is:

Question

Quizplus · Accepted Answer

The overhead rate is calculated as budgeted overhead divided by budgeted direct labor hours: $1,271,000 / 82,000 = $15.50 per hour. Applied overhead is $15.50 * 86,300 = $1,337,650. The actual overhead is $1,201,000, so the overhead is underapplied by $1,337,650 - $1,201,000 = $136,650.

Jackson Inc If Overhead Is Applied Based on Direct Labor Hours, Overapplied/underapplied