#2

Findley Company and Lemon Company both use predetermined overhead rates to apply manufacturing overhead to production. Findley's is based on machine hours, and Lemon's is based on materials cost. Budgeted production and cost data for Findley and Lemon are as follows: Findley Lemon Manufacturing overhead $912,000 $990,000 Units 20,000 60,000 Machine hours 48,000 33,750 Materials cost $450,000 $1,800,000 At the end of the year, Findley Company had incurred overhead of $915,000 and had produced 19,600 units using 47,780 machine hours and materials costing $445,000. Lemon Company had incurred overhead of $972,000 and had produced 61,500 units using 32,650 machine hours and materials costing $1,777,500. Required: 1. Compute the predetermined overhead rates for Findley Company and Lemon Company. Predetermined Overhead Rate Findley per machine hour Lemon % of materials cost 2. Was overhead over- or underapplied for each company? Findley Lemon By how much? Findley: $ II Lemon: $ overapplied underapplied