Answered: . Calculate the predetermined overhead…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 30P: Primera Company produces two products and uses a predetermined overhead rate to apply overhead....

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Question

Predetermined Departmental Overhead Rates, Applying Overhead to Production

At the beginning of the year, Hallett Company estimated the following:

	Cutting Department	Sewing Department	Total
Overhead	$245,800		$353,000	$598,800
Direct labor hours	31,200		101,100	132,300
Machine hours	155,800		—	155,800

Hallett uses departmental overhead rates. In the cutting department, overhead is applied on the basis of machine hours. In the sewing department, overhead is applied on the basis of direct labor hours. Actual data for the month of June are as follows:

	Cutting Department	Sewing Department	Total
Overhead	$20,540		$35,850	$56,390
Direct labor hours	2,800		8,740	11,540
Machine hours	13,660		—	13,660

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Open spreadsheet

Required:

1.	Calculate the predetermined overhead rates for the cutting and sewing departments. Round your answers to the nearest cent.
	Overhead rate for Cutting Department: $ per machine hour
	Overhead rate for Sewing Department: $ per direct labor hour

2.	Calculate the overhead applied to production in each department for the month of June. Do not round intermediate calculations. Round your answers to the nearest dollar.
	Overhead applied to Cutting Department in June: $
	Overhead applied to Sewing Department in June: $

3.	By how much has each department's overhead been overapplied or underapplied? Round your answers to the nearest dollar.
	Cutting Department: $ overapplied
	Sewing Department: $ underapplied

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