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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Transcribed Image Text: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.
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