Underapplied and Overapplied Overhead
Wosepka Welding Company applies factory overhead at a rate of $8.50 per direct-labor hour. Selected data for 20X7 operations are (in thousands):
Case 1 Case 2
Direct-labor hours 30 36
Direct-labor cost $220 $245
Indirect-labor cost 32 40
Sales commissions 20 15
Depreciation, manufacturing equipment 22 32
Direct-materials cost 230 250
Factory fuel costs 35 47
Depreciation, finished-goods warehouse 5 17
Cost of goods sold 420 510
All other factory costs 138 204
Compute for both cases:
1. Factory overhead applied.
2. Total factory overhead incurred.
3. Amount of underapplied or overapplied factory overhead.