Analyzing underapplied or overapplied overhead. Pappas Manufacturers uses the direct labor hours method for applying manufacturing overhead.

Question:

The overhead application rate for 19X7 is $5.49 per hour, based on anticipated fixed costs of $272,250 and anticipated variable costs of $633,600 with an expected volume of 165,000 labor hours.

Instructions 1. Compute the total underapplied or overapplied overhead for the year.

2. Analyze the total overapplied or underapplied overhead into a volume variance and a spending variance.

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