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The following cost data relate to the office overhead costs of the Starlight Tax Preparation Company during the just completed year:
Overhead costs incurred:
Office rent........ $ 25,000Office supplies.......$ 6,000Utilities, office.......$ 15,000Salary, office manager....$ 55,000Salary, receptionist.....$ 35,000Depreciation office equipment.$ 10,000Software licensing fees...$ 24,000Other miscellaneous expenses.$ 30,000Total overhead costs..... $ 200,000The company uses a predetermined overhead rate to apply overhead cost to each tax job. The rate for the year was $6 per tax prepare hour. A total of 35,000 tax prepare hours was recorded for the year.
Required:
Compute the amount of under or over applied overhead cost for the year.
The Manufacturing overhead was overapplied by $6800, so when we close it to COGS, the new amount comes to $466400.
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