Question

PearCo's actual overhead for the year was $650,000 with a total of 170,000 direct labor hours worked on jobs.How much total overhead was applied to PearCo's jobs during the year? Use PearCo's predetermined overhead rate of $4.00 per direct labor hours.Was it overapplied or underapplied? and by how much?

Answer 1

The applied overhead is greater than the $650,000 by $30,000 which shows a over-applied overhead.

Step-by-step explanation:

The computation of the applied overhead is shown below:

= Direct labor hours × predetermined overhead rate

= 170,000 hours × $4

= $680,000

And, the actual overhead is $650,000

Since the applied overhead is greater than the $650,000 by $30,000 which shows an over-applied overhead.

In mathematically,

Over-applied overhead = Applied overhead - actual overhead

= $680,000 - $650,000

= $30,000