Question

Motorsports, Inc. had a predetermined overhead rate of $2 per direct labor hour. The direct labor hours were estimated to be 25,000. The actual manufacturing overhead incurred was $47,000 and 24,000 actual direct labor hours were worked. How much was overhead over/under applied last year

Answer 1

$1,000

Explanation:

For the computation of overhead over/under applied last year first we need to find out the applied overhead which is shown below:-

Applied overhead = Actual direct labor × Per direct labor

= 24,000 × $2

= $48,000

Over applied overhead = Applied overhead - Actual overhead

= $48,000 - $47,000

= $1,000

Therefore for computing the overhead over/under applied last year we simply applied the above formula.