Cairo products applies overhead using a combined rate for fixed and variable overhead. The rate is 125% of direct labor cost. During the first three months of the current year, actual costs were incurred as follows:
Direct Labor costs Actual Overhead
Jan $360,000 $440000
Feb 330,000 420,400
Mar 340,000 421,400
a. What amount of overhead was applied to production in each of the three months?
b. What was the underapplied or overapplied overhead for each of the three months and for the first quarter?
