Cornerstones of Managerial Accounting 4th Edition by Maryanne Mowen, Don Hansen, Dan Heitger

Exercise 8

Predetermined Departmental Overhead Rates, Applying Overhead to Production
At the beginning of the year, Hallett Company estimated the following:
Refer to the information for Hallett Company above. Hallett uses departmental overhead rates. In the cutting department, overhead is applied on the basis of machine hours. In the sewing department, overhead is applied on the basis of direct labor hours. Actual data for the month of June are as follows:
Required:
1. Calculate the predetermined overhead rates for the cutting and sewing departments.
2. Calculate the overhead applied to production in each department for the month of June.
3. By how much has each department's overhead been overapplied Underapplied