Homework SourseKLM Company listed the following data for 2017 Budgeted fact
KLM Company listed the following data for 2017:
Budgeted factory overhead $2,015,800
Actual factory overhead 2,125,900
Budgeted direct labor hours 195,000
Budgeted machine hours 86,875
Actual machine hours 91,500
Actual direct labor hours 189,600
(a) Assuming KLM applied overhead based on direct labor hours; calculate the company\'s predetermined overhead rate for 2017
(b) Assuming KLM applied overhead based on machine hours; calculate the company\'s predetermined overhead rate for 2017
(c) If overhead is applied based on direct labor hours, calculate the overapplied/underapplied overhead.
(d) If overhead is applied based on machine hours, calculate the overapplied/underapplied overhead.
Solution
(a) Assuming KLM applied overhead based on direct labor hours; calculate the company\'s predetermined overhead rate for 2017
Predetermine overhead rate = Budgeted overhead/Budgeted labour hour
= 2015800/195000
Predetermine overhead rate = 10.33 per labour hour
(b) Assuming KLM applied overhead based on machine hours; calculate the company\'s predetermined overhead rate for 2017
Predetermine overhead rate = Budgeted overhead/Budgeted machine hour
= 2015800/86875
Predetermine overhead rate = 23.20 per machine hour
(c) If overhead is applied based on direct labor hours, calculate the overapplied/underapplied overhead.
overapplied/underapplied overhead = Applied overhead-actual overhead
= 189600*10.33-2125900
Under applied overhead = 167332
(d) If overhead is applied based on machine hours, calculate the overapplied/underapplied overhead.
overapplied/underapplied overhead = Applied overhead-actual overhead
= 91500*23.20-2125900
Under applied overhead = 3100
