Seager Bats, Inc. uses a job order costing system that charges overhead to jobs

Question

Seager Bats, Inc. uses a job order costing system that charges overhead to jobs on the basis of direct labor cost. Seager used the following cost predictions: overhead costs $1,285,750, and direct labor costs of $695,000. At year-end, the company's records show that actual overhead costs for the year are $1,278,000, and actual direct labor costs are $692,000. a. Determine the predetermined overhead rate for the year. (1 point) b. Compute the amount of overapplied or underapplied overhead. (1 point)

Explanation / Answer

1.predetermined overhead rate=(Estimated overhead/Estimated direct labor costs)

=(1285750/695000)=185% of direct labor costs

2.Overhead applied=(185%*692000)=$1280200

Hence overapplied overhead=(1280200-1278000)=$2200.

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