Classifying Costs as Product or Period

The process to manufacture custom machine parts involves two departments. Assume that manufacturing overhead is applied using direct

labor hours in Department One and machine hours in Department Two. The following annual data was budgeted for the current year.

REQUIRED

a$.$ Determine the applied overhead rate for Department One and the applied overhead rate for Department Two.

b$.$ Job #$800$ incurred $518$ actual direct labor hours $(500$ in Department One and $18$ in Department Two$)$ and $235$ actual machine hours $(45$ in

Department One and $190$ in Department Two$).$ Determine total overhead applied to Job #$800.$

$

C$.$

After year$-$end, the following actual data was compiled.

Determine total applied overhead and the total amount of over$($under$)$ applied overhead for the year for each department.

Note: Use a negative sign to indicate underapplied overhead