Stacey Clothing
Stacey Clothing assigns overhead to clients based on total labour hours. The following information is available for the month of June:
$\begin{array}{ll}
\text { Estimated direct labour hours } & 4000 \text { hours } \
\text { Estimated indirect labour hours } & 2000 \text { hours } \
\text { Estimated overhead costs } & \$ 18000 \
\text { Actual total labour hours } & 6400 \text { hours } \
\text { Actual overhead costs } & \$ 17500
\end{array}$

-By how much was overhead over- or underapplied for the month of June?

Question

Stacey Clothing
Stacey Clothing assigns overhead to clients based on total labour hours. The following information is available for the month of June:
$\begin{array}{ll}
\text { Estimated direct labour hours } & 4000 \text { hours } \
\text { Estimated indirect labour hours } & 2000 \text { hours } \
\text { Estimated overhead costs } & \$ 18000 \
\text { Actual total labour hours } & 6400 \text { hours } \
\text { Actual overhead costs } & \$ 17500
\end{array}$

-By how much was overhead over- or underapplied for the month of June?

Quizplus · Accepted Answer

Overhead was overapplied by $1700.Overhead application = (Estimated overhead costs / Estimated total labour hours) x Actual total labour hours= ($18000 / 6000 hours) x 6400 hours= $19200Actual overhead costs = $17500Overhead overapplied = $19200 - $17500= $1700

Stacey Clothing Stacey Clothing Assigns Overhead to Clients Based on Total

Stacey Clothing
Stacey Clothing Assigns Overhead to Clients Based on Total