Question 1

Cost and production data for a manufacturing company for a year were as follows:

Budgeted variable factory overhead $120,000

Budgeted fixed factory overhead $180,000


Budgeted production (direct labour hours) 15,000

Actual variable factory overhead $125,300

Actual fixed factory overhead $164,700


Actual production (direct labour hours) 15,500

Factory overhead is applied to production using direct labour hours as the cost driver.


(a)Calculate the factory overhead application rate, and,

(b)Under or over applied overhead.