Triangle Catering assigns overhead to specific jobs based on direct labor hours. At the beginning of the current year, estimated overhead costs were $650,000 and estimated direct labor hours were 50,000. By the end of the year, actual overhead costs
were calculated to be $685,000 and actual direct labor hours were 55,000. Required: A. Calculate the predetermined overhead rate. B. How much overhead would be applied to a particular catering job that required 45 direct labor hours? C. How much total overhead was applied during the year? D. By how much was overhead over- or underapplied for the year? Be sure to indicate whether it was over- or underapplied.
A. Predetermined rate = $650,000 ΒΈ 50,000 = $13.00 per direct labor hour
B. $585.00 ($13.00 x 45 direct labor hours)
C. Total applied overhead was $715,000 (55,000 x $13.00).
D. $30,000 overapplied. The difference between actual and applied was $30,000 ($715,000 vs. $685,000). Overhead was overapplied.
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