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At the beginning of the year, Hallett Company estimated the following:

Cutting Department Sewing Department Total

Overhead $244,500 $350,000 $594,500

Direct labor hours 31,200 100,000 131,200

Machine hours 150,000 - 150,000

Assume that Hallett has decided to use a plantwide overhead rate based on direct labor hours. Actual data for the month of June are as follows:

Cutting Department Sewing Department Total

Overhead $20,610 $35,750 $56,360

Direct labor hours 2,800 8,600 11,400

Machine hours 13,640 - 13,640

Required:

1. Calculate the predetermined plantwide overhead rate. Round your answer to the nearest cent.

2. Calculate the overhead applied to production for the month of June.

3. Calculate the overhead variance for the month of June.

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Answers (1)
  1. Today, 04:01
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    Answers explained below

    Explanation:

    1. Cutting department overhead rate $1.63 per machine hour. Using the formula overhead cost / machine hours = (244,500/150000).

    Sewing department overhead rate $3.5 per direct labour hour using the formula overhead cost/direct labour hours = (350,000/100000)

    2. overhead applied to cutting in june is $22233.20 given by the formula overhead rate * machine hours = (13640*1.63), overhead applied to sewing in june is $30100 given by the formula direct labour hours * overhead rate per direct labour hour = (8600*3.5)

    3. Using the actual data,

    Cutting Department Overhead Variance = 20610 - 22233.20 = - $1623.20 (overapplied).

    Sewing Department Overhead Variance=35750 - 30100 = $5650 (underapplied)
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Home » Business » At the beginning of the year, Hallett Company estimated the following: Cutting Department Sewing Department Total Overhead $244,500 $350,000 $594,500 Direct labor hours 31,200 100,000 131,200 Machine hours 150,000 - 150,000 Assume that Hallett has
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