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2 September, 10:08

At the beginning of the year, Han Company estimated the following: Overhead $582,400 Direct labor hours 80,000 Han uses normal costing and applies overhead on the basis of direct labor hours. For the month of January, direct labor hours were 6,950. By the end of the year, Han showed the following actual amounts: Overhead $613,320 Direct labor hours 84,100 Assume that unadjusted Cost of Goods Sold for Han was $927,000. Required: 1. Calculate the predetermined overhead rate for Han. Round your answer to the nearest cent. $ per direct labor hour 2. Calculate the overhead applied to production in January. (Note: Round to the nearest dollar.) $ 3. Calculate the total applied overhead for the year. $ Was overhead over - or underapplied

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  1. 2 September, 10:17
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    1. Calculate the predetermined overhead rate for Han. Round your answer to the nearest cent.

    $7.28 per direct labor hour

    2. Calculate the overhead applied to production in January. (Note: Round to the nearest dollar.)

    $50,596

    3. Calculate the total applied overhead for the year. $ Was overhead over - or underapplied

    applied overhead during the year = $612,248 overhead was underapplied by $1,072 since actual costs were higher than budgeted costs

    Explanation:

    estimates:

    Overhead $582,400

    Direct labor hours 80,000

    overhead rate per hour = $582,400 / 80,000 = $7.28

    direct labor hours during January = 6,950

    applied overhead = 6,950 x $7.28 = $50,596

    actual overhead during the year:

    Overhead $613,320

    Direct labor hours 84,100

    applied overhead during the year = 84,100 x $7.28 = $612,248

    over or under applied overhead = actual overhead - applied overhead = $613,320 - $612,248 = $1,072 unfavorable
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