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At the beginning of 20X4, XYZ Company estimated that they would have $500,000 in factory overhead costs for the year. Management has decided that direct
At the beginning of 20X4, XYZ Company estimated that they would have $500,000 in factory overhead costs for the year. Management has decided that direct labor hours would be an appropriate driver of factory overhead application. After reviewing records of their operations in prior years, management estimates that they will use 1,250,000 direct labor hours during 20X4.
During the year, 1,275,000 direct labor hours were used, and factory overhead costs were $505,000. | ||||||||
1a. Calculate the company's predetermined overhead rate. | ||||||||
$ | = | $ | per direct labor hour | |||||
1b. Calculate the factory overhead applied to production during the period | ||||||||
$ | x | = | $ | applied overhead | ||||
1c. | Determine the balance in the factory overhead account after overhead has been applied. | |||||||
$ | ||||||||
1d. Was factory overhead overapplied or underapplied? | ||||||||
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