Jackson Company applies overhead to products using direct labor cost as the activity level. During
2008, Jackson Company had the following estimated costs:
Direct materials .................... $243,000
Direct labor ........................ 200,000
Advertising expense ................. 35,000
Rent on factory building ............ 36,000
Depreciation .................... ... 60,000
Indirect materials .................. 20,000
Sales commissions ................... 50,000
Production supervisor's salary ...... 40,000
Insurance on sales equipment ........ 17,000
It is known that 70% of the depreciation relates to equipment in the factory while 30% of the
depreciation relates to equipment in the administrative offices.
Jackson Company's accounting records indicated the following actual costs had been incurred
during 2008:
Direct materials purchased ........... $237,000
Direct labor ......................... 220,000
Total overhead cost .................. 125,000
Total selling & administrative costs . 130,000
Calculate the amount that Jackson Company's overhead was over-applied by in 2008. Do not use