Answered: Testing Department Assembly Department…

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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Question

Calculating Departmental Overhead Rates and Applying Overhead to Production

At the beginning of the year, Glaser Company estimated the following.

Glaser uses departmental overhead rates. In the assembly department,
overhead is applied on the basis of direct labor hours. In the testing
department, overhead is applied on the basis of machine hours. Actual
data for the month of March are as follows

1. Calculate the predetermined overhead rates for the assembly
and testing departments.
2. Calculate the overhead applied to production in each
department for the month of March.
3. By how much has each department's overhead been
overapplied? Underapplied?

Testing
Department
Assembly
Department
Total
Overhead
$338,000
$630,000
$968,000
130,000
45,000
Direct labor hours
40,000
170,000
Machine hours
120,000
165,000

Assembly
Department
Testing
Department
$58,000
Total
Overhead
$87,850
15,150
$29,850
Direct labor hours
11,700
3,450
Machine hours
4,100
10,900
15,000

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