Berkshire Ltd distributes overhead based on direct labour dollars. The estimated manufacturing overhead for the year was $520 000 and the estimated direct labour dollars for the year were $130 000. Indicate the amount of underapplied or overapplied overhead if actual direct labour was $118 000 and actual manufacturing overhead was $497 400.

Question

Quizplus · Accepted Answer

Overhead applied = (Actual direct labour / Estimated direct labour) x Estimated overhead= (118,000 / 130,000) x 520,000= $497,400Underapplied overhead = Actual overhead - Overhead applied= 497,400 - 497,400= $25,400

Berkshire Ltd Distributes Overhead Based on Direct Labour Dollars