CALCULATING DEPARTMENTAL OVERHEAD RATES AND APPLYING OVERHEAD TO PRODUCTION At the beginning of the year, Videosym Company estimated the following:

Assembly Department Testing Department Total Overhead $620,000 $180,000 $800,000 Direct labor hours 155,000 20,000 175,000 Machine hours 80,000 120,000 200,000 Videosym 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:

Assembly Department Testing Department Total Overhead $53,000 $15,500 $68,500 Direct labor hours 13,000 1,680 14,680 Machine hours 6,800 13,050 19,850 Required:

. Calculate the predetermined overhead rates for the assembly and testing departments.

. Calculate the overhead applied to production in each department for the month of March.
. By how much has each department’s overhead been overapplied? Underapplied?
Exercise