The following information about the Zhang Company is available on December 31:Advertising expense………………………………$ 28,800Depreciation of factory equipment………………42,320Depreciation of office equipment…………….… 10,800Direct labor……………………………………..142,600Factory utilities……………………………….....35,650Interest expense………………………………....6,650Inventories, January 1:? Raw materials…………………………………3,450 Work in process………………………………17,250 Finished goods…………………………...……35,600Inventories, December 31:? Raw materials……………………………..…2,300 Work in
process…………………………..…20,700 Finished goods………………………………31,050Raw materials purchases………………………132,450Rent on factory building………………………41,400Indirect labor…………………………………..51,750Sales commissions……………………………..16,500The company applies overhead on the basis of 125% of direct labor costs. Calculate the amount of over- or underapplied overhead.
What will be an ideal response?
| Factory overhead costs: | ? |
| Depreciation of factory equipment …………… | $ 42,320 |
| Factory utilities ……………………………….. | 35,650 |
| Rent on factory building ……………………… | 41,400 |
| Indirect labor ………………………………….. | 51,750 |
| Total actual factory overhead costs ………….. | $171,120 |
| ? | ? |
| Factory overhead applied (142,600 ? 125%) … | $178,250 |
| Overapplied overhead ………………………… | $ 7,130 |
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