Donald Aeronautics Company uses a budgeted overhead rate in applying overhead to products on a machine-hour basis for department A and on a direct-labour hour basis for department B. At the beginning of 20X0, the company’s management made the following budget predictions:

1. What is the budgeted overhead rate that should be applied in department A? In department B?
2. What is the total overhead cost of product M89?
3. If 120 units of product M89 are produced, what is their unit cost?
4. At the end of 20X0, actual results for the year’s operations were as follows:

Find the underapplied or overapplied overhead for each department and for the factory as a whole.

Transcribed Image Text:

Direct-labour cost Factory overhead Direct-labour hours Machine hours Department A €1,500,000 €1,820,000 Material placed in production Direct-labour cost Direct-labour hours Machine hours 90,000 350,000 Department B €1,200,000 €1,000,000 Cost records of recent months show the following accumulations for product M89: 125,000 20,000 900 3,500 Department A Department B €12,000 €32,000 €10,800 €10,000 1,250 150