Media,Inc. ,an advertising agency,applies overhead to jobs on the basis of direct professional labor hours.Overhead was estimated to be $150,000,direct professional labor hours were estimated to be 15,000,and direct professional labor cost was projected to be $225,000.During the year,Media incurred actual overhead costs of $146,000,actual direct professional labor hours of 14,500,and actual direct labor cost of $222,000.By year-end,the firm's overhead was:

Question

Quizplus · Accepted Answer

The predetermined overhead rate is $150,000 / 15,000 hours = $10 per hour. Applied overhead is 14,500 hours * $10 = $145,000. Actual overhead is $146,000. Therefore, overhead is $1,000 underapplied ($146,000 - $145,000).

Media,Inc ,An Advertising Agency,applies Overhead to Jobs on the Basis