Applying Overhead With Differing Bases [LO3 CC5; LO7 CC14] Estimated cost and operating data for three companies for the upcoming year follow: Company A B C Direct labour-hours 80,000 45,000 70,000 Machine-hours 20,000 130,000 21,000 Direct materials cost $420,000 $290,000 $320,000 Manufacturing overhead cost $548,000 $520,000 $448,000

Predetermined overhead rates are computed using the following bases in the three companies: Company Overhead Rate Based On X Direct labour-hours Y Machine-hours Z Direct materials cost Required: Compute the predetermined overhead rate to be used in each company during the upcoming year. 1. Assume that Company X works on three jobs during the upcoming year. Direct labour-hours recorded by job are as follows: job 418, 16,000 hours; job 419, 24,000 hours; job 420, 38,000 hours. How much overhead cost will the company apply to work in process for the year? If actual overhead costs total $535,000 for the year, will overhead be under- or overapplied? By how much?