Refer to M2-3 for Willard Company.

1. Determine how much overhead to apply to production.

2. Explain whether applied overhead was based on actual values, estimated values, or both.

Data from M2-3

Willard Company applies manufacturing overhead costs to products as a percentage of direct labor dollars. Estimated and actual values of manufacturing overhead and direct labor costs are summarized here:

1. Compute the predetermined overhead rate.

2. Interpret this rate and explain how it will be used to apply manufacturing overhead to jobs.

3. Explain whether you used estimated or actual values to compute the rate, and why.

Transcribed Image Text:

Estimated Actual Direct labor cost $400,000 $350,000 Manufacturing overhead 800,000 725,000