Calculating Departmental Overhead Rates and Applying Overhead to Production At the beginning of the year, Glaser Company estimated the following:   Assembly Department Testing Department Total Overhead $467,000     $415,630     $882,630     Direct labor hours 140,000     138,600     278,600     Machine hours 109,250     81,938     191,188     Glaser uses departmental overhead rates. In the assembly department, overhead is applied on the basis of direct labor hours. In the testing department, overhead is applied on the basis of machine hours. Actual data for the month of March are as follows:   Assembly Department Testing Department Total Overhead $46,700     $41,563     $88,263     Direct labor hours 14,000     13,860     27,860     Machine hours 10,925     8,194     19,119     Required: 1.  Calculate the predetermined overhead rates for the assembly and testing departments. Round your answers to the nearest cent. Assembly department overhead rate $ per direct labor hour Testing department overhead rate $ per machine hour 2.  Calculate the overhead applied to production in each department for the month of March. If required, round your answers to nearest whole value. Assembly department $ Testing department $ 3.  By how much has each department's overhead been overapplied? Underapplied? Assembly department   $ Testing department

Cornerstones of Cost Management (Cornerstones Series)
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Author:Don R. Hansen, Maryanne M. Mowen
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Chapter4: Activity-based Costing
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Problem 30P: Primera Company produces two products and uses a predetermined overhead rate to apply overhead....
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  1. Calculating Departmental Overhead Rates and Applying Overhead to Production

    At the beginning of the year, Glaser Company estimated the following:

      Assembly
    Department
    Testing
    Department

    Total
    Overhead $467,000     $415,630     $882,630    
    Direct labor hours 140,000     138,600     278,600    
    Machine hours 109,250     81,938     191,188    

    Glaser uses departmental overhead rates. In the assembly department, overhead is applied on the basis of direct labor hours. In the testing department, overhead is applied on the basis of machine hours. Actual data for the month of March are as follows:

      Assembly
    Department
    Testing
    Department

    Total
    Overhead $46,700     $41,563     $88,263    
    Direct labor hours 14,000     13,860     27,860    
    Machine hours 10,925     8,194     19,119    

    Required:

    1.  Calculate the predetermined overhead rates for the assembly and testing departments. Round your answers to the nearest cent.

    Assembly department overhead rate $ per direct labor hour
    Testing department overhead rate $ per machine hour

    2.  Calculate the overhead applied to production in each department for the month of March. If required, round your answers to nearest whole value.

    Assembly department $
    Testing department $

    3.  By how much has each department's overhead been overapplied? Underapplied?

    Assembly department   $
    Testing department   $
 
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