PREDETERMINED DEPARTMENTAL OVERHEAD RATES, APPLYING OVERHEAD TO PRODUCTION At the beginning of the year, Badger Company estimated the following:

Cutting Department Sewing Department Total Overhead $378,000 $450,000 $828,000 Direct labor hours 131,200 200,000 331,200 Machine hours 210,000 — 210,000 Badger uses departmental overhead rates. In the cutting department, overhead is applied on the basis of machine hours. In the sewing department, overhead is applied on the basis of direct labor hours. Actual data for the month of June are as follows:

Cutting Department Sewing Department Total Overhead $32,612 $35,750 $68,362 Direct labor hours 11,800 16,000 27,800 Machine hours 17,840 — 17,840 required:

. Calculate the predetermined overhead rates for the cutting and sewing departments.

. Calculate the overhead applied to production in each department for the month of June.

. By how much has each department’s overhead been overapplied? Underapplied?

Cornerstone Exercise