Sterling Manufacturing uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company estimated its manufacturing overhead at $320,000 for the year and direct labor hours at 80,000 hours. Actual manufacturing overhead costs incurred during the year totalled $355,000, and the actual direct labor hours worked were 85,000 hours. Calculate the over applied or under applied overhead for the year.

Sterling Manufacturing uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company estimated its manufacturing overhead at $320,000 for the year and direct labor hours at 80,000 hours. Actual manufacturing overhead costs incurred during the year totalled $355,000, and the actual direct labor hours worked were 85,000 hours. Calculate the over applied or under applied overhead for the year.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter7: The Master Budget And Flexible Budgeting

Section: Chapter Questions

Problem 23Q: If a factory operates at 100% of capacity one month, 90% of capacity the next month, and 105% of...

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Queen Bees Honey, Inc., estimated its annual overhead to be $110,000 and based its predetermined overhead rate on 27,500 direct labor hours. At the end of the year, actual overhead was $106,000 and the total direct labor hours were 29,000. What is the entry to dispose of the over applied or under applied overhead?
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