Create an Excel spreadsheet to compute budgeted factory overhead rates and apply factory overhead to production. Use the results to answer questions about your findings.

Scenario: Kevin Aeronautics Company has asked you to determine its budgeted factory overhead rates. It would also like you to apply the appropriate factory overhead amounts to actual production and determine any variances.

Department A Department B

Direct labor cost $1,540,000 $1,230,000

Factory overload $1,936,000 $1,020,600

Direct Labor Hours 88,000 126,000

Machine hours 352,000 18,000

Once the spreadsheet is completed please answer the following questions:

1. What was the budgeted factory overhead rate for department A? Department B?

2. What overhead amount was distributed to department A? Was the overhead over or underapplied? By what amount?

3. What overhead amount was distributed to department B? Was the overhead over or underapplied? By what amount?