Reference no: EM131969847
Question - Diamond Company and Client Company assign manufacturing overhead to Work in Process Inventory using direct labor cost. The following information is available for the companies for the year:
Diamond Company Client Company
Actual direct labor cost $ 200,000 $ 112,500
Estimated direct labor cost $187,500 $ 125,000
Actual manufacturing overhead cost $ 72,500 $ 95,000
Estimated manufacturing overhead cost $75,000 $100,000
Required
1. Compute the predetermined overhead rate for each company.
2. Determine the amount of overhead cost that would be applied to Work in Process Inventory for each company.
3. Compute the amount of overapplied or underapplied manufacturing overhead cost for each company.