Black Cat Limited supplies the following information.Manufacturing overhead is applied on the basis of direct labour hours.
$\begin{array}{l}
\text { on the basis of direct labour hours. }\
\begin{array} { l r }
\text { Estimated manufacturing overhead costs } & \$ 2,295,000 \
\text { Estimated direct labour hours } & 340,000 \
\text { Actual direct labour hours } & 348,000 \
\text { Actual manufacturing overhead costs } & \$ 2,357,000
\end{array}
\end{array}$
Compute the amount of overapplied or underapplied overhead.

Question

Black Cat Limited supplies the following information.Manufacturing overhead is applied on the basis of direct labour hours.
$\begin{array}{l}
\text { on the basis of direct labour hours. }\
\begin{array} { l r } 
\text { Estimated manufacturing overhead costs } & \$ 2,295,000 \
\text { Estimated direct labour hours } & 340,000 \
\text { Actual direct labour hours } & 348,000 \
\text { Actual manufacturing overhead costs } & \$ 2,357,000
\end{array}
\end{array}$
Compute the amount of overapplied or underapplied overhead.

Quizplus · Accepted Answer

The predetermined overhead rate is $2,295,000 / 340,000 hours = $6.75 per hour. Applied overhead is $6.75 * 348,000 = $2,349,000. Actual overhead is $2,357,000. The difference is $2,357,000 - $2,349,000 = $8,000 underapplied.

Black Cat Limited Supplies the Following Information Compute the Amount of Overapplied or Underapplied Overhead