Question - 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
|
$338,000
|
$630,000
|
$968,000
|
|
Direct labor hours
|
130,000
|
40,000
|
170,000
|
|
Machine hours
|
45,000
|
120,000
|
165,000
|
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
|
$29,850
|
$58,000
|
$87,850
|
|
Direct labor hours
|
11,700
|
3,450
|
15,150
|
|
Machine hours
|
4,100
|
10,900
|
15,000
|
Required:
1. Calculate the predetermined overhead rates for the assembly and testing departments.
2. Calculate the overhead applied to production in each department for the month of March.
3. By how much has each department's overhead been overapplied? Underapplied?