Acme Fireworks uses a traditional overhead allocation based on direct labor hours. For the current year overhead is estimated at $1,000,000 and direct labor hours are budgeted at 200,000 hours. Actual hours worked were 195,000 and actual overhead was $978,000.
(a) Compute the predetermined manufacturing overhead rate.
(b) Compute the applied manufacturing overhead.
(c) Compute the amount of over/under applied manufacturing overhead.
a)Predetermined Manufacturing overhead rate=Estimated Overhead/Budgeted Labour Hours