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19 October, 15:09

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?

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  1. 19 October, 15:22
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    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
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