Compute the amount of under- or over-applied overhead for the year. Sonia Company manufactures custom-made...
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Accounting
Compute the amount of under- or over-applied overhead for the year.
Sonia Company manufactures custom-made fire trucks and had the following estimates and actual costs for 2016:
| Estimate | Actual | |
| Direct materials used | $1,400,000 | $1,500,000 |
| Direct labor | 1,000,000 | 1,050,000 |
| Indirect labor | 400,000 | 375,000 |
| Factory insurance | 25,000 | 25,000 |
| Factory maintenance | 100,000 | 50,000 |
| Factory rent | 575,000 | 550,000 |
| Factory equipment depreciation | 100,000 | 100,000 |
Work-in-process inventory is $0 at 1/1/16 and $70,000 at 12/31/16. Finished goods inventory is $80,000 at 1/1/16 and $65,000 at 12/31/16.
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