At the beginning of the year, Horvath Company estimated the following:
Overhead ...........$486,400
Direct labor hours ....95,000
Horvath uses normal costing and applies overhead on the basis of direct labor hours. For the month of January, direct labor hours were 7,830. By the end of the year, Horvath showed the following actual amounts:
Overhead ............$476,100
Direct labor hours ......93,500
Assume that unadjusted Cost of Goods Sold for Horvath was $707,000.
Required:
1. Calculate the predetermined overhead rate for Horvath.
2. Calculate the overhead applied to production in January.
3. Calculate the total applied overhead for the year. Was overhead over- or under applied by how much?
4. Calculate adjusted Cost of Goods Sold after adjusting for the overhead variance.