Overhead Rate for Multiple Products and Over/Under-Absorbed Overhead

Required: a. Calculate Digital Ear's budgeted manufacturing overhead rate per direct labor hour for this year b. Using absorption costing, calculate the budgeted manufacturing cost per unit for each of DigitalEar's four hearing aid devices c. During the year, actual manufacturing overhead incurred (fixed plus variable) was $3,110,000, and the actual number of direct labor hours used producing the four hearing aids was A21 845 C24 D88 26,000 23,800 18,600 12,250 Calculate the over- or under-absorbed overhead DigitalEar for this year. d. Assuming that the entire over- or under-absorbed overhead you calculated in part (c) is written off to cost of goods sold, does this write-off increase or decrease net income before taxes? Explain.

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