Question
Apollo Manufacturing produces a basic cellphone as a contract manufacturer. Overhead is applied at a rate of 130% of direct labor cost. The direct labor rate is $33 per hour. In March, there was no beginning or ending work in process and the assembly department produced 62,000 finished phones. The materials cost was $295,000, and there were 12,750 direct labor hours worked during the month. Actual overhead spending was $549,100 during the month.
Calculate the total cost of production in the month of March and the cost per unit for each phone produced. Determine if overhead was over-applied or under-applied and by what amount.