Ford Motor Company uses a predetermined overhead rate based on direct labor hours. For the current year, Ford estimated the following:
•Direct labor hours: 50,000 hours
•Manufacturing overhead costs: $200,000
Actual data for the year:
•Direct labor hours worked: 55,000 hours
•Actual manufacturing overhead costs: $215,000
Required:
1.Calculate the predetermined overhead rate.
2.Determine the applied manufacturing overhead.
3.Calculate the overhead variance and indicate if it is overapplied or underapplied.