Verizox Company uses a job order costing system with manufacturing overhead applied to products based on direct labor hours. At the beginning of the most recent year, the company estimated its manufacturing overhead cost at $171,080. Estimated direct labor cost was $470,000 for 18,800 hours (average of $25.00 per hour).

Verizox Company uses a job order costing system with manufacturing overhead applied to products based on direct labor hours. At the beginning of the most recent year, the company estimated its manufacturing overhead cost at $171,080. Estimated direct labor cost was $470,000 for 18,800 hours (average of $25.00 per hour).

Actual costs for the most recent month are summarized here:

Item Description	Total Cost
Direct labor (1,880 hours @ $26.00 per hour)	$	48,880
Indirect costs
Indirect labor		2,570
Indirect materials		3,420
Factory rent		3,220
Factory supervision		4,740
Factory depreciation		5,770
Factory janitorial work		1,190
Factory insurance		1,820
General and administrative salaries		4,140
Selling expenses		5,380

Requirement 1:

Calculate the predetermined overhead rate. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Predetermined overhead rate

$ 9.10

per DL hour

Requirement 2:

Calculate the amount of applied manufacturing overhead. (Omit the "$" sign in your response.)

Applied manufacturing overhead

$ 17,108

Requirement 3:

Calculate actual manufacturing overhead costs. (Omit the "$" sign in your response.)

Actual manufacturing overhead costs

$ 22,730

Requirement 4:

Compute over- or underapplied overhead. (Input the amount as positive value. Omit the "$" sign in your response.)

Overhead

underapplied

$ 5,622

Explanation:

1:

Predetermined overhead rate = $171,080 / 18,800 = $9.10 per DL hour

2:

Applied manufacturing overhead = Predetermined overhead rate × Actual value of allocation base

Applied manufacturing overhead = $9.10 × 1,880 actual direct labor hours = $17,108

3:

Indirect Labor	$	2,570
Indirect Material		3,420
Factory Rent		3,220
Factory Supervision		4,740
Factory Depreciation		5,770
Factory Janitorial Work		1,190
Factory Insurance		1,820
Actual Manufacturing Overhead Costs	$	22,730

4:

Manufacturing Overhead

Actual	22,730		Applied	17,108
Balance (Underapplied)	5,622