Question

During March 2019, Annapolis Corporation recorded $44,000 of costs related to factory overhead. Alpha's overhead application rate is based on direct labor hours. The preset formula for overhead application estimated that $43,900 would be incurred, and 4,000 direct labor hours would be worked. During March, 5,750 hours were actually worked. Use this information to determine the amount of factory overhead that was (over) or under applied. (Round answers to the nearest whole dollar. Enter as a positive number if under applied. Enter as a negative number if over applied.)

Answer 1

Overapplied 19,106.25

Step-by-step explanation:

`(Cost\: Of \:Manufacturing \:Overhead)/(Cost \:Driver)= Overhead \:Rate`

43,900/4,000 direct labor hours= 10.975 This will be the rate per hour

Applied Overhead

direct labor hours x rate

5,750 x 10.975 = 63,106.25

Actual overhead 44,000

The applied overhead is greated than actual overhead.

We capitalize more cost than it was actually incurred. Therefore it was overapplied.

We calculate the difference to get by how much.

63,106.25 - 44,000 = 19,106.25