Question: Calculating Departmental Overhead Rates and Applying Overhead to Production At the beginning of the year, Tecknik Company estimated the following:

                                  Assembly Department            Testing Department               Total

Overhead                            $435,000                            $720,000                    $1,155,000

Direct labor hours                   145,000                               30,000                        175,000

Machine hours                         80,000                              120,000                        200,000

Tecknik uses departmental overhead rates. In the assembly department, overhead is applied on the basis of direct labor hours. In the testing department, overhead is applied on the basis of machine hours. Actual data for the month of March are as follows:

                                  Assembly Department            Testing Department               Total

Overhead                              $38,500                              $76,500                    $115,000

Direct labor hours                     13,000                                 1,680                       14,680

Machine hours                           6,800                                13,050                       19,850

Required: 1. Calculate the predetermined overhead rates for the assembly and testing departments.

2. Calculate the overhead applied to production in each department for the month of March.

3. By how much has each department's overhead been overapplied? Underapplied?