EXERCISE 3-34

NOTE: Actual selling and administrative expense, although given in the exercise, is irrelevant to
the solution.
$997,500
1. Predetermined overheadrate   $13.30 per hour
75,000 hours

2. To compute actual manufacturing overhead:

Depreciation $ 231,000
Property taxes 21,000
Indirect labor 82,000
Supervisory salaries 200,000
Utilities 59,000
Insurance 30,000
Rental of space 300,000
Indirect material:
Beginning inventory, January 1 ..................................... $ 48,000
Add: Purchases ............................................................... 94,000
Indirect material available for use .................................. $142,000
Deduct: Ending inventory, December 31 ....................... 63,000
Indirect material used...................................................... 79,000
Actual manufacturing overhead ............................................ $1,002,000

actual applied
Overapplied = manufacturing – manufacturing
overhead overhead overhead

= $1,002,000 – ($13.3080,000*) = $62,000

*Actual direct-labor hours.

3. Manufacturing Overhead...................................................... 62,000

Cost of Goods Sold .................................................... 62,000

4. In the electronic version of the solutions manual, press the CTRL key and click on
the following link: Build a Spreadsheet 03-34.xls
EXERCISE 3-35
NOTE: Budgeted sales revenue, although given in the exercise, is irrelevant to the solution.
budgetedmanufacturing overhead
1. Predetermined overhead rate =
budgetedlevel of cost driver
$364,000
(a) = $36.40 per machine hour
10,000 machine hours
$364,000
(b) = $18.20 per direct-labor hour
20,000 direct-labor hours
$364,000 $1.30 per direct-labor dollar or 130%
(c) =
$280,000* of direct-labor cost

*Budgeted direct-labor cost = 20,000$14

2. Actual applied overapplied or

manufacturing – manufacturing = underapplied
overhead overhead overhead

(a) $340,000 – (11,000)($36.40) = $60,400 overapplied overhead

(b) $340,000 – (18,000)($18.20) = $12,400 underapplied overhead

(c) $340,000 – ($270,000†)(130%) = $11,000 overapplied overhead

†Actual direct-labor cost = 18,000$15