The following information applies to the questions displayed below.] The followi

Question

The following information applies to the questions displayed below.] The following data pertain to the Aquarius Hotel Supply Company for the year just ended. Budgeted sales revenue Budgeted manufacturing overhead Budgeted machine hours (based on practical capacity) Budgeted direct-labor hours (based on practical capacity) Budgeted direct-labor rate per hour Actual manufacturing overhead Actual machine hours Actual direct-labor hours Actual direct-labor rate per hour $205,000 364,000 8,000 20,000 13 338,000 11,000 18,000 16

Explanation / Answer

Answer

a ) machine hour rate = budgeted overhead / machine hours

= 364000 / 8000

= 45.5 per machine hour

over applied or underapplied

= actual overhead incurred - budgetted overhead

= 338000 - (11000 * 45.5 )

= 162500 over applied

b ) labour hour rate

= budgeted overhead / labour hour

= 364000 / 20000

= 18.2 per labour hour

over applied or underapplied

= actual overhead incurred - budgetted overhead

= 338000 - ( 18000 * 18.2 )

= 10400 under applied

c ) direct labour doller

= budgeted overhead / labour cost in dollars

= 364000 / 20000 * 13

= 1.4 per dollar

over applied or underapplied

= actual overhead incurred - budgetted overhead

= 338000 - (18000 * 16 * 1.4)

= 65200 over applied

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