Jackson Company and Royce Company both use predetermined overhead rates to apply manufacturing overhead to production. Jackson’s is based on machine hours, and Royce’s is based on materials cost. Budgeted production and cost data for Jackson and Royce are as follows:

At the end of the year, Jackson Company had incurred overhead of $610,000 and had produced 19,600 units using 31,980 machine hours and materials costing $294,000.
Royce Company had incurred overhead of $648,000 and had produced 61,500 units using 22,650 machine hours and materials costing $1,185,000.
Required:
1. Compute the predetermined overhead rates for Jackson Company and Royce Company.
2. Was overhead over- or underapplied for each company, and by how much?LO1

Transcribed Image Text:

Jackson Royce Manufacturing overhead $608,000 $660,000 Units 20,000 60,000 Machine hours 32,000 22,500 Materials cost $300,000 $1,200,000