Problem:
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.