Trex by Rex produces back packs and fanny packs for the outdoors enthusiast. Production costs include direct materials, direct labor, and manufacturing overhead - both fixed and variable. The following costs were budgeted for the year:

Fixed manufacturing overhead	$187,200
Variable manufacturing overhead	$1.10/direct labor hour
Fixed selling and administrative	$375,000

The backpacks are expected to require 2.5 direct labor hours and planned production is 12,000 units. The fanny packs are expected to require 1.8 direct labor hours and planned production is 18,000 units.

The actual direct labor hours required in production for the year were as follows:

Product

Direct Labor Hours Used

Back Packs	34,060 DL hours
Fanny Packs	16,250 DL hours

Overhead is applied to production using direct labor hours and the actual manufacturing cost for the year was $270,500.

1. Calculate the manufacturing overhead rate used to apply overhead to production of both the back packs and the fanny packs.

2. What is the resulting over-or-under-absorb ed overhead for the year?

3. What does the over-or-under-absorbed overhead represent?

4. How will the over-or-under-absorbed overhead be handled iin the determination of the finals costs of products?

THANK YOU!