Bakker, Inc., an advertising agency, applies overhead to jobs on the basis of direct professional labor hours. Overhead was estimated to be $180,000, direct professional labor hours were estimated to be 15,000, and direct professional labor cost was projected to be $240,000. During the year, Bakker incurred actual overhead costs of $176,500, actual direct professional labor hours of 14,500, and actual direct labor cost of $303,000. By year-end, the firm's overhead was:
$[Fill in the blank]

state O for over or U for under [Fill in the blank]

Question

Bakker, Inc., an advertising agency, applies overhead to jobs on the basis of direct professional labor hours. Overhead was estimated to be $180,000, direct professional labor hours were estimated to be 15,000, and direct professional labor cost was projected to be $240,000. During the year, Bakker incurred actual overhead costs of $176,500, actual direct professional labor hours of 14,500, and actual direct labor cost of $303,000. By year-end, the firm's overhead was:
                                        $[Fill in the blank]

state O for over or U for under [Fill in the blank]

BlackTom AI · Accepted Answer

Predetermined overhead rate equals estimated overhead divided by estimated allocation base, so compute rate per direct professional labor hour first.

1) Relevant concepts
- Predetermined (budgeted) overhead rate = Estimated total overhead / Estimated total allocation base (here, direct professional labor hours).
- Applied overhead = Predetermined rate × Actual allocation base (actual hours).
- Overhead variance = Actual overhead incurred − Applied overhead. If positive, overhead is underapplied (U); if negative, it is overapplied (O).

2) Step-by-step reasoning and calculations
- Estimated overhead = $180,000.
- Estimated direct professional labor hours = 15,000 hours.
- Predetermined overhead rate = $180,000 ÷ 15,000 hours.
  - Calculation: 180,000 / 15,000 = 12.00
  - Rate = $12.00 per direct professional labor hour.
- Actual direct professional labor hours = 14,500 hours.
- Applied overhead = Predetermined rate × Actual hours.
  - Calculation: $12.00 × 14,500 = $174,000.
- Actual overhead incurred = $176,500.
- Overhead variance = Actual overhead − Applied overhead.
  - Calculation: $176,500 − $174,000 = $2,500.

3) Interpretation (why this is correct)
- The applied overhead ($174,000) is less than the actual overhead incurred ($176,500) by $2,500. That positive difference means the firm did not apply enough overhead to jobs; therefore overhead is underapplied (U). The numeric shortfall is $2,500.

4) Why other possibilities are incorrect
- “Overapplied” would require applied overhead to exceed actual overhead (Applied > Actual). Here Applied ($174,000) < Actual ($176,500), so “overapplied” is incorrect.
- Any answer computed using direct labor cost instead of hours would be wrong because the problem explicitly states overhead is applied on the basis of direct professional labor hours.

Conclusion: The year-end overhead variance is $2,500 and it is underapplied (U), which matches the provided answer (2500, U).

类似问题

Is the total overhead variance from the previous question favourable or unfavourable? Unfavourable

Is the total overhead variance from the previous question favourable or unfavourable? [ Select ] Favourable Unfavourable

Was manufacturing overhead for April underapplied or overapplied, and by what amount? [Fill in the blank] by $[Fill in the blank] (In the first blank, write either underapplied or overapplied. In the second blank, enter the amount without decimals, commas, spaces, or dollar signs.)

Compute the underapplied or overapplied overhead for department K at January 31. If it's underapplied, put a negative sign.

How did Egyptian culture and governance change during the Ptolemaic period compared to the pharaonic period?

Name the Supreme Court decision that removed financial constraints on PACs.

Political scientists Joshua Kalla and David Broockman find that senior policy makers made themselves available to _____ between three and four times more often than they did to constituents.

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单