A company uses direct labour hours as the basis for application of overheads .the company has furnished the following information :Estimated annual overhead cost is $900,000,Actual annual her head cost is $580,000 ,estimated direct labour hours is 50000 and actual direct labour hours is 40000 calculate overapplied or underapplied ocerheads
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Explanation
Absorption rate = Budgeted overhead expenditure/Budgeted level of activities
900,000/50,000
$18/labor h
amount absorbed = 40,000 hrs* $18/lab hr
= $720,000
actual expenditure = $580,000
over absorbed =$140,000
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don't no
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