watts company uses a predetermined overhead rate based on direct labor hours to

Question

watts company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company estimated manufacturing overhead at 255,000 for the year and direct labor hours at 100,000 hours. Actual manufacturing overhead costs incurred during the year totaled $270,000. Actual direct labor hours were 105,000. What is the overapplied or underapplied overhead for the year? watts company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company estimated manufacturing overhead at 255,000 for the year and direct labor hours at 100,000 hours. Actual manufacturing overhead costs incurred during the year totaled $270,000. Actual direct labor hours were 105,000. What is the overapplied or underapplied overhead for the year? watts company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company estimated manufacturing overhead at 255,000 for the year and direct labor hours at 100,000 hours. Actual manufacturing overhead costs incurred during the year totaled $270,000. Actual direct labor hours were 105,000. What is the overapplied or underapplied overhead for the year?

Explanation / Answer

Calculating predetermined Overhead Rate =Estimated Overhead Cost/Estimated Hours =255000/100000 2.55 Application of overhead Cost = No of Hours X Predetermined Rate =105000*2.55 267750 Actual Overhead 270000 Overhead Applied 267750 Under Application of Overhead Cost 2250

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