Calculate the underapplied overhead for the year

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Morrison and Company uses a predetermined overhead rate. Overhead for the next twelve months is estimated to be $400,000. The company applies overhead as a percentage of direct labor cost, which is estimated to be $500,000 for the next year.

During the year, actual direct labor cost amounted to $520,000 and the actual overhead was as outlined below:

Factory rent $80,000

Indirect materials $40,000

Indirect labor $100,000

Maintenance $80,000

Depreciation $100,000

Payroll taxes $80,000

Others $80,000

Total $560,000

On the basis of the data, complete the following:

Calculate the overapplied or underapplied overhead for the year.

Reference no: EM131912773

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