Sykora, Inc., which uses a predetermined overhead rate based on direct labor hours, estimated total overhead for the year to be $12,000,000 and total direct labor hours to be 320,000 hours. Calculate Sykora's predetermined overhead rate. In April, Sykora incurred actual overhead costs of $1,050,000 and used 30,000 hours. How much was Sykora's over - or under-applied overhead for the month of April? Enter your answer in the following space. Show all calculations.

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Business

Mallory

18 March, 01:45

Sykora, Inc., which uses a predetermined overhead rate based on direct labor hours, estimated total overhead for the year to be $12,000,000 and total direct labor hours to be 320,000 hours. Calculate Sykora's predetermined overhead rate. In April, Sykora incurred actual overhead costs of $1,050,000 and used 30,000 hours. How much was Sykora's over - or under-applied overhead for the month of April? Enter your answer in the following space. Show all calculations.

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Leslie Wheeler · Answer 1

Instructions are listed below.

Explanation:

Giving the following information:

Sykora, Inc., which uses a predetermined overhead rate based on direct labor hours, estimated total overhead for the year to be $12,000,000 and total direct labor hours to be 320,000 hours.

Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

Estimated manufacturing overhead rate = 12,000,000/320,000 = $37.5 per direct labor hour

In April, Sykora incurred actual overhead costs of $1,050,000 and used 30,000 hours.

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

Allocated MOH = 37.5*30,000 = $1,125,000

Over/under allocation = real MOH - allocated MOH

Over/under allocation = 1,050,000 - 1,125,000 = 75,000 overallocated