The following information was gathered for Longview Company for the year ended December 31,2018:
Assume that direct labor-hours are the cost-allocation base.
Required:
a.Compute the budgeted factory overhead rate.
b.Compute the factory overhead applied.
c.Compute the amount of over/underapplied overhead.
Definitions:
Direct Labor-Hours
The total hours of work directly contributed by laborers to produce goods or services.
Manufacturing Overhead
The indirect costs involved in making a product, excluding direct materials and direct labor expenses.
Predetermined Overhead Rate
A rate used to apply manufacturing overhead to products or job orders, computed in advance for each period.
Traditional Costing
An accounting method that allocates overhead costs to products based on a single, volume-based cost driver, such as direct labor hours.
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