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 $392,000 $415,520 $807,520 Direct labor hours 123,000 147,600 270,600 Machine hours 50,000 31,000 81,000 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 $58,800 $62,328 $121,128 Direct labor hours 18,450 22,140 40,590 Machine hours 7,500 4,650 12,150 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 Overapplied $ Testing department Underapplied $

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 30P: Primera Company produces two products and uses a predetermined overhead rate to apply overhead....

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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	$392,000			$415,520	$807,520
Direct labor hours	123,000			147,600	270,600
Machine hours	50,000			31,000	81,000

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	$58,800			$62,328	$121,128
Direct labor hours	18,450			22,140	40,590
Machine hours	7,500			4,650	12,150

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	Overapplied	$
Testing department	Underapplied	$

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