Palmer Co has two departments that all goods pass through: machining and assembly.
Machining overhead is applied based on machine hours, and assembly overhead is applied based
on direct labour hours.
Data on each department are as follows:
Machining Assembly
Budgeted Overhead $ $
Budgeted Direct Labour Hours
Budgeted Machine Hours
Actual Overhead $ $
Actual Direct Labour Hours
Actual Machine Hours
Required:
If the company applied overhead using a plantwide rate based on direct labour hours,
calculated the plantwide overhead rate.
Calculate the overhead rate for each department.
What is each department's applied overhead?
Calculate each department's overhead variance. Specify whether it is overapplied or
underapplied.
