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Calculating Departmental Overhead Rates and Applying Overhead to Production

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

 Assembly

DepartmentTesting

Department

Total

Overhead$736,000  $640,320  $1,376,320  

Direct labor hours82,000  95,940  177,940  

Machine hours64,000  45,440  109,440  


Glaser uses departmental overhead rates. In the assembly department, overhead is applied on the basis of direct labor hours. In the testing department, overhead is applied on the basis of machine hours. Actual data for the month of March are as follows:

 Assembly

DepartmentTesting

Department

Total

Overhead$66,240  $57,629  $123,869  

Direct labor hours7,380  8,635  16,015  

Machine hours5,760  4,090  9,850 

 Required:

1. Calculate the predetermined overhead rates for the assembly and testing departments. Round your answers to the nearest cent.

Assembly department overhead rate$ per direct labor hour

Testing department overhead rate$ per machine hour

2. Calculate the overhead applied to production in each department for the month of March. If required, round your answers to nearest whole value.

Assembly department$

Testing department$

3. By how much has each department's overhead been overapplied? Underapplied?

Assembly department $

Testing department $

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