Mallet Music Company makes custom marimbas and xylophones. Since much of the wor

Question

Mallet Music Company makes custom marimbas and xylophones. Since much of the work on these musical instruments is done by hand, the company uses direct labor hours as its manufacturing overhead application base. The company’s annual budgeted overhead costs for 72,500 direct labor hours totaled $580,000.

1. Assume that during the year, the company incurred manufacturing overhead totaling $586,000 for 72,500 direct labor hours. By how much was manufacturing overhead under- or overapplied for the year? (Enter negative amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

2.Assume that during the year, the company incurred manufacturing overhead totaling $586,000 for 73,550 direct labor hours. By how much was manufacturing overhead under- or overapplied for the year? (Enter negative amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

3. Assume that during the year, the company incurred manufacturing overhead totaling $590,000 for 73,550 direct labor hours. By how much was manufacturing overhead under- or overapplied for the year? (Enter negative amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Explanation / Answer

Pre-determined OH rate per DLH: Estimated Overheads 580000 Divide: Estimated DLH 72500 OH rate per DLH 8 Req 1. Actual Manufacturing OH 586000 Less: Overheads applied 580000 (72500 hours @8) Under-applied Overheads 6000 Req 2. Actual Manufacturing OH 586000 Less: Overheads applied 588400 (73550 hours @8) Over-applied overheads -2400 Req 3. Actual Manufacturing OH 590000 Less: Overheads applied 588400 (73550 Hours @8) Under-applied overheads 1600

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