Lynch Audio produces stereo components for a major automotive stereo

Lynch Audio produces stereo components for a major automotive stereo manufacturer. It currently uses the machine hour method of applying factory overhead to production. Information for the previous year follows: Budgeted amounts Actual amounts Factory overhead $3,000,000 $3,050,000 Direct labor hours @ $10 per hour $250,000 $248,000 # of machine hours 750,000 735,000 During the year, Lynch produced a new product, Super Tweeters, which involved $27,000 of material, 3,100 direct labor hours and 4,500 machine hours. a. Compute the predetermined factory overhead rate based on machine hours. b. Compute the amount of under- or overapplied factory overhead.

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