CHAPTER 13-AI Accounting for Overhead; Budgeted Rates Kevin Aeronautics Company uses a budgeted overhead rate in applying overhead to products on a machine-hour basis for department A and on a direct-labor hour basis for department B. At the beginning of 20X0, the company's management made the following budget predictions: Department A Department B Direct-labor cost $1,540,000 $1,230,000 Factory overhead $1,936,000 $1,020,600 Direct-labor hours 88,000 126,000 Machine hours 352,000 18,000 CHAPTER 13 ACCOUNTING FOR OVERHEAD COSTS 555 Cost records of recent months show the following accumulations for product M89: Department A Department B Material placed in production $12,500 $19,529 Direct-labor cost $10,600 $ 9,600 Direct-labor hours 880 1,260 Machine hours 3,520 130 1. What is the budgeted overhead rate that should be applied in department A? In department B? 2. What is the total overhead cost of product M89? 3. If 105 units of product M89 are produced, what is its unit cost? 4. At the end of 20X0, actual results for the year's operations were as follows: Department A Department B Actual overhead costs incurred $1,390,000 $1,230,000 Actual direct-labor hours 83,000 117,000 Actual machine hours 304,000 22,000 Find the underapplied or overapplied overhead for each department and for the factory as a whole