Calculating the Predetermined Overhead Rate, Applying Overhead to Production, Reconciling Overhead at the End of the Year, Adjusting Cost of Goods Sold for Under- and Overapplied Overhead

At the beginning of the year, Horvath Company estimated the following:

Overhead . . . . . .. . . .. .. . . . . . . . . $486,400

Direct labor hours . . . . . .. . . .. .. . . . .93,500

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. Round your answer to the nearest cent.
2. Calculate the overhead applied to production in January. ( Note : Round to the nearest dollar.)
3. Calculate the total applied overhead for the year. Was overhead over- or underapplied? By how much?
4. Calculate adjusted Cost of Goods Sold after adjusting for the overhead variance.

Answer rating: 100% (QA)

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