Question

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?

Answer 1

Answer:

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