Estimated cost and operating data for the forthcoming period for three companies are given below:

Company A Company B Company C

Direct labor hours 12,000 15,000 20,000

Manufacturing overhead $90,000 $120,000 $150,000

Machine hours 20,000 20,000 25,000

Direct labor cost $60,000 $ 75,000 $100,000

Predetermined OH Direct Labor Direct Labor Machine

rates are based on hours cost hours

Required:

1. Compute the predetermined overhead rate to be used in the forthcoming period for each company.

2. Assume for Company B that $80,000 of direct labor cost actually is incurred. How much overhead will be applied to work in process?

3. Assume for Company C that 30,000 machine hours are actually worked during the forthcoming period. How much overhead will be applied to work in process? If actual overhead costs total $175,000 will overhead be over- or under-applied? By how much?