[The following information applies to the questions displayed below.] The follow

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 $210,000 364,000 10,000 20,000 13 336,000 11,000 18,000 17

Explanation / Answer

Cost Drivers Amount a) Machine Hours Overapplied        64,400 b) Direct-Labor Hours Underapplied           8,400 c) Direct-Labor dollars Overapplied        92,400 Requirement 2 a Cost Drivers - Machine Hours Predetermined overhead rate using machine hours =364,000/10000 =36.4 per machine hour Applied overhead using machine hours =11000*36.4 =400,400 Overapplied overhead using machine hours =400,400 -336,000 = 64,400 Requirement 2 b Cost Drivers - Direct labor Hours Predetermined overhead rate using direct labor hours =364,000/20,000 =18.2 per direct labor hour Applied overhead using direct labor hours =18000*18.2 =327,600 Underapplied overhead using direct labor hours =327,600 -336,000 = 8,400 Requirement 2 c Cost Drivers - Direct labor dollars Predetermined overhead rate using direct labor dollars =364,000/(20,000*13) =1.40 per direct labor dollar Applied overhead using direct labor dollars =18000*17*1.4 =428,400 Overapplied overhead using direct labor dollars =428,400 -336,000 = 92,400

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