During the current year, Carlisle Manufacturing expected Job No. 16 to cost $450,000 of overhead, $750,000 of materials, and $300,000 in labor. Carlisle applied overhead based on direct labor cost. Actual production required an overhead cost of $420,000, $825,000 in materials used, and $330,000 in labor. All of the goods were completed. What is the amount of over - or under-applied overhead?

Question

Business

Franco Golden

27 July, 01:32

During the current year, Carlisle Manufacturing expected Job No. 16 to cost $450,000 of overhead, $750,000 of materials, and $300,000 in labor. Carlisle applied overhead based on direct labor cost. Actual production required an overhead cost of $420,000, $825,000 in materials used, and $330,000 in labor. All of the goods were completed. What is the amount of over - or under-applied overhead?

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Kenny · Answer 1

Underapplied = $75000

Explanation:

Giving the following information:

Carlisle Manufacturing expected Job No. 16 to cost $450,000 of overhead, $750,000 of materials, and $300,000 in labor.

Carlisle applied overhead based on direct labor cost.

Actual production:

Overhead cost = $420,000.

Direct materials = $825,000.

Direct labor = $330,000.

First, we need to calculate the overhead rate

Overhead rate = 450000/300000 = 1.5 direct labor

Overhead according to rate:

330000*1.5 = $495000

Real overhead = $420000

Underapplied = $75000