Question 2 15 marks

At the beginning of the year Grey Corporation estimated the following:

Assembly Department Packaging Department Overhead R 840,000 R 210,000 Direct labor hours 80,000 hrs. 4,000 hrs. Machine hours 20,000 hrs. 12,000 hrs.

Grey uses departmental overhead rates. In the assembly department, overhead is applied to direct labor hours. In the packaging department, overhead is applied on the basis of machine-hours. Actual data for the month of April are as follows:

Assembly Department Packaging Department Overhead R 42,759 R 20,400 Direct labor hours 4,000 hrs. 300 hrs. Machine hours 1,000 hrs. 1,200 hrs.

Required: 1.) Calculate the predetermined overhead rate for the assembly and packaging departments.

2.) Calculate the overhead applied to production in each department for the month of April.

3.) Calculate how much each department's overhead is overapplied/underapplied.