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how do i compute the amount of underapplied or overapplied overhead cost for the year?

Asked by: megan 1597 views YA Discussion

The following cost data relate to the manufacturing activities of Black Company during the just completed year:

Manufacturing overhead costs:
Property taxes, factory…3000
Utilities, factory…5000
Indirect labor…10000
Depreciation, factory…24000
Insurance, factory…6000

Total actual manufacturing overhead costs…48000

Other costs incurred:
Purchases of raw materials…32000
Direct labor costs…40000

Inventories:
Raw materials, beginning…8000
Raw materials, ending…7000
Work in process, beginning…6000
Work in process, ending…7500

The company uses a predetermined overhead rate to apply overhead cost to jobs. The rate for the year was $ 5 per machine-hour; a total of 10,000 machine-hours was recorded for the year. All raw materials ultimately become direct materials-none are classified as indirect materials.

How do i compute the amount of underapplied or overapplied overhead cost for the year?

How others found here:

  • The company uses a predetermined overhead rate to apply overhead cost to jobs The rate for the year was $5 per machine-hour; a total of 10 000 machine-hours was recorded for the year All raw materials ultimately become direct materials—none are classified
  • The following cost data relate to the manufacturing activities of Black Company during the just completed year:
  • compute the amount of underapplied or overapplied overhead for the year

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