P4-14 Determining the under- and overapplied overhead Ko-Be Corporation has four departmental accounts: Building Maintenance, General Factory Overhead, Machining, and As- sembly. The direct labor hour method is used to apply factory overhead to the jobs being worked on in Machining and Assem- bly. The company expects each production department to use 30,000 direct labor hours during the year. The estimated over- head rates for the year include the following: Machining Assembly Variable cost per hour $1.30 $1.50 Fixed cost per hour.. 2.70 3.00 $4.00 $4.50 During the year, both Machining and Assembly used 28,000 direct labor hours. Factory overhead costs incurred during the year follow: Building maintenance $30,000 General factory overhead 75,400 Machining 45,800 Assembly 68,800

P4-14 Determining the under- and overapplied overhead Ko-Be Corporation has four departmental accounts: Building Maintenance, General Factory Overhead, Machining, and As- sembly. The direct labor hour method is used to apply factory overhead to the jobs being worked on in Machining and Assem- bly. The company expects each production department to use 30,000 direct labor hours during the year. The estimated over- head rates for the year include the following: Machining Assembly Variable cost per hour $1.30 $1.50 Fixed cost per hour.. 2.70 3.00 $4.00 $4.50 During the year, both Machining and Assembly used 28,000 direct labor hours. Factory overhead costs incurred during the year follow: Building maintenance $30,000 General factory overhead 75,400 Machining 45,800 Assembly 68,800

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Description: In determining application rates at the beginning of the year,cost allocations were made as follows, using the sequentialdistribution method:Building Maintenance to General Factory Overhead, 10%; toMachining, 50%; to Assembly, 40%.General factory ov

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The Ruqaiyah Company estimated Department A's overhead at P255,000 for the period based on an estimated volume of 100,000 direct labor hours. At the end of the period, the factory overhead control account for Department A had a balance of P265,500; actual direct labor hours were 105,000. What was the over- or under-applied overhead for the period? * A. P2,250 B. P(2,250) C. P15,000 D. P(15,000)
A-5
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