Brief Exercise 159 During 2016, Arb Company incurred the following direct labor costs: January $20,000 and February $30,000. Arb uses a predetermined overhead rate of 120% of direct labor cost. Estimated overhead for the 2 months, respectively, totaled $19,500 and $35,700. Actual overhead for the 2 months, respectively, totaled $25,000 and $33,500.
Calculate overhead applied.
Determine if overhead is over- or underapplied for each of the two months and the respective amounts.