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Question - At the beginning of the year, Potatoes Unlimited (PU) estimated the following:
Harvesting Department
Packaging Department
Total
Overhead
$310,000
$90,000
$400,000
Direct Labour Hours
77,500
10,000
87,500
Machine Hours
40,000
60,000
100,000
PU uses departmental overhead rates. In the Harvesting Department, overhead is applied on the basis of machine hours. In the Packaging Department, overhead is applied on the basis of direct labour hours. Actual data for the month of August are as follows.
$26,500
$7,750
$34,250
6,500
840
7,340
3,400
6,525
9,925
Required -
1. Calculate the predetermined overhead rates for the Harvesting and Packaging Departments.
2. Calculate the overhead applied to production in each department for August.
3. How much as each department's overhead been overapplied or underapplied?
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