Assume the following: Actual overhead costs equalled estimated overhead.Actual direct labour hours exceeded estimated direct labour hours used to calculate the predetermined overhead rate.If overhead is applied using the predetermined overhead rate,what will be the impact on the overhead?

Question

Quizplus · Accepted Answer

Actual overhead costs equalled estimated overhead, so there is no over- or underapplied overhead due to this factor. However, actual direct labour hours exceeded estimated direct labour hours used to calculate the predetermined overhead rate. This means that the actual overhead rate is lower than the predetermined overhead rate. As a result, overhead is overapplied.

Assume the Following: Actual Overhead Costs Equalled Estimated Overhead