During 2010, Arb Company Incurred the Following Direct Labor Costs

question 142

Essay

During 2010, Arb Company incurred the following direct labor costs: January $15,000 and February $30,000. Arb uses a predetermined overhead rate of 120% of direct labor cost. Estimated overhead for the 2 months, respectively, totaled $19,500 and $35,700. Actual overhead for the 2 months, respectively, totaled $18,400 and $32,500.
Instructions
Determine if overhead is over- or underapplied for each of the two months and the respective amounts.

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Definitions:

Imperfectly Competitive

A market structure where individual sellers have some control over the market price due to product differentiation or other factors.

Purely Competitive

A market structure with many sellers offering identical products, leading to no individual influence on price by single sellers.

Marginal Product

The additional output produced as a result of adding one more unit of a specific input, holding all other inputs constant.

Resource

A source or supply from which a benefit is produced and that has some utility, which can include natural resources, human resources, and capital.