Re A company allocates overhead at a rate of 155 of direct l

Re A company allocates overhead at a rate of 155% of direct labor cost direct labor cost is $550,000 Actual overhead cost for the current period is $1,150,000, and Determine whether there is over or underapplied overhead using the T-account below 3 Answer is not complete. 25 Factory Overhead 1,150,000 Actual overhead Overhead applied 1,150,000

Solution

given,

overhead is applied at the rate of 155% of direct labour cost:

=>direct labour cost *155%

=>$550,000 *155%

=>$852,500.

actual overhead = $1,150,000

since actual overhead is greater than applied overhead, we have under applied overhead.

under applied overhead = $1,150,000 - 852,500

=>$297,500

now,

factory overhead:

the following is the journal entry:

Actual overhead	$1,150,000	$852,500	applied overhead
		$297,500	overhead underapplied