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Nolan Company, which manufactures electrical switches, uses a standard cost system and carries all inventories at standard. The standard manufacturing overhead costs per switch are
Nolan Company, which manufactures electrical switches, uses a standard cost system and carries all inventories at standard. The standard manufacturing overhead costs per switch are based on direct labor hours and are shown below: Variable overhead (5 hours @ $12 per direct labor hour) $ 60 *Fixed overhead (5 hours @ $15 per direct labor hour) 75 Total overhead per switch $135 *FOH rate based on capacity of 200,000 direct labor hours per month The following information is available for the month of December: 46,000 switches were produced although 40,000 switches were scheduled to be produced 225,000 direct labor hours were worked at a total cost of $5,625,000. Variable manufacturing overhead costs were $2,750,000. Fixed manufacturing overhead costs were $3,050,000. . . . Required (1): Determine whether the variable overhead costs are: 1) Overapplied or Underapplied? (copy and paste one of the two) 2) And by how much $ (format: xxxxx)
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