The following cost data relate to the manufacturing activities of Black Company during the just completed year:



Manufacturing overhead costs:
Property taxes, factory $ 3,000
Utilities, factory 4,800
Indirect labor 9,900
Depreciation, factory 23,900
Insurance, factory 5,800

Total actual manufacturing overhead costs $ 47,400

Other costs incurred:
Purchases of raw materials $ 31,600
Direct labor cost $ 39,600
Inventories:
Raw materials, beginning $ 8,400
Raw materials, ending $ 6,400
Work in process, beginning
$ 5,400
Work in process, ending $ 7,900

The company uses a predetermined overhead rate to apply overhead cost to jobs. The rate for the year was $5 per machine-hour; a total of 12,000 machine-hours was recorded for the year. All raw materials ultimately become direct materials—none are classified as indirect materials.

Required:
1.
Compute the amount of underapplied or overapplied overhead cost for the year. (Input the amount as a positive value.)

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To compute the amount of underapplied or overapplied overhead cost for the year, you need to compare the actual manufacturing overhead costs incurred with the applied manufacturing overhead costs.

To calculate the applied manufacturing overhead costs, multiply the predetermined overhead rate ($5 per machine-hour) by the actual machine-hours recorded for the year (12,000 machine-hours):

Applied Overhead Costs = Predetermined Overhead Rate x Actual Machine-Hours
= $5 per machine-hour x 12,000 machine-hours
= $60,000

Next, compare the applied overhead costs with the actual manufacturing overhead costs:

Underapplied/Overapplied Overhead = Actual Manufacturing Overhead Costs - Applied Overhead Costs
= $47,400 - $60,000
= -$12,600

Since the actual manufacturing overhead costs ($47,400) are less than the applied overhead costs ($60,000), there is an overapplied overhead of $12,600.