Answer:
Over applied Overhead =$ 42,500
Explanation:
Actual Overhead $325,000
Estimated Overhead $350,000
Over applied overhead is when the Predetermined overhead is more than the actual overhead . Under applied overhead is when the Predetermined overhead is less than the actual overhead .
Predetermined Overhead rate= Overhead / total direct labor hours
= 350,000/ 500,000 (100)= 70%
Applied Overhead = Predetermined Overhead rate( actual direct labor hours)
= 70 % (525,000) = $367,500
Applied Overhead $367,500
Less Actual Overhead $325,000
Over applied Overhead =$ 42,500
