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During March 2019, Alaska Corporation recorded $266,000 of costs related to factory overhead. Alaska's overhead application rate is based on direct labor hours. The preset formula for overhead application estimated that $250,000 would be incurred, and 12,500 direct labor hours would be worked. During March, 12,500 hours were actually worked. Use this information to determine the amount of overhead over or under applied. Enter overapplied overhead as a negative number. (round

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Answer:

Underapplied overhead= $16,000

Explanation:

Because the estimated and real direct labor hours are the same, the estimated overhead equals the allocated overhead.

Allocated overhead= $250,000

Actual overhead costs= $266,000

To calculate the over/under allocation, we need to use the following formula:

Under/over applied overhead= real overhead - allocated overhead

Under/over applied overhead= 266,000 - 250,000

Underapplied overhead= $16,000

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