Silo's Company uses a predeterminated overhead rate based on labor-hours to apply manufacturing overhead to jobs. Estimate and actual data for direct labor and manufacturing overhead for last year are as follows:
Direct Labor Hours.............600,000 550,000
Manufacturing overhead .......$720,000 $680,000
The manufacturing overhead for Silo's Company for last year was:
a) underapplied by $40,000
b) overapplied by $20,000
c) overapplied by $40,000
d) underapplied by $20,000
Calculation are as follows:
720,000 - 680,000 = $40,000
I would like to know if $40,000 is overapplied or underapplied and if the calculations above are correct.
Thanks in advance.
This question was answered on: Sep 16, 2020
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