If estimated annual factory overhead is $480,000;overhead is applied using direct labor hours;estimated annual direct labor hours are 200,000;actual March factory overhead is $41,000;and actual March direct labor hours are 17,000;then overhead is:

Question

Quizplus · Accepted Answer

To calculate the predetermined overhead rate we divide estimated annual factory overhead by estimated annual direct labor hours:

$480,000 / 200,000 = $2.40 per direct labor hour

To calculate the applied overhead we multiply the predetermined overhead rate by the actual direct labor hours worked in March:

$2.40 * 17,000 = $40,800

Since the actual overhead incurred in March is $41,000, overhead is underapplied by $200 ($41,000 - $40,800). Therefore, the best choice is D).

If Estimated Annual Factory Overhead Is $480,000;overhead Is Applied Using