Appleton Piping is a manufacturer of pipes and applies overhead costs to product

Question

Appleton Piping is a manufacturer of pipes and applies overhead costs to production at a budgeted indirect-cost rate of $11 per direct labor-hour. The data below was taken from the September 2018 records. You will need to calculate the following:

a) What amount of overhead was incurred during September 2018

b) What amount of overhead was allocated during September 2018

c) During September 2018, did Appleton Piping under or over allocate overhead, and by how much?

Direct materials                                                             $365,789

      Direct labor (16,000 hours @ $11/hour)                        $ 41,879

      Indirect labor                                                                  $ 25,879

      Plant facility rent                                                          $ 105,687

      Depreciation on plant machinery and equipment           $ 42,789

      Sales commissions                                                          $ 29,578

      Administrative expenses                                                 $ 36,547

Explanation / Answer

a Overhead incurred = 25879+105687+42789= 174355 b Overhead allocated = 16000*11 = 176000 c Over-allocated overhead = 176000-174355= 1645

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