Solaris Corporation estimated its overhead costs for Year 0 to be as follows: fixed, $300,000; variable, $2.50 per unit. Solaris expected to produce 60,000 units during the year.
a. Compute the rate to be used to apply overhead costs to products (assume units will be used as the allocation base).
b. During Year 0, Solaris incurred overhead costs of $400,000 and produced 65,000 units.
Compute overhead costs applied to units produced.
c. Refer to part b. Compute the amount of underapplied or overapplied overhead for the year.