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1 January, 03:57

PearCo's actual overhead for the year was $650,000 with a total of 170,000 direct labor hours worked on jobs. How much total overhead was applied to PearCo's jobs during the year? Use PearCo's predetermined overhead rate of $4.00 per direct labor hours. Was it overapplied or underapplied? and by how much?

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  1. 1 January, 07:39
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    The applied overhead is greater than the $650,000 by $30,000 which shows a over-applied overhead.

    Explanation:

    The computation of the applied overhead is shown below:

    = Direct labor hours * predetermined overhead rate

    = 170,000 hours * $4

    = $680,000

    And, the actual overhead is $650,000

    Since the applied overhead is greater than the $650,000 by $30,000 which shows an over-applied overhead.

    In mathematically,

    Over-applied overhead = Applied overhead - actual overhead

    = $680,000 - $650,000

    = $30,000
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