2. Adams Manufacturing allocates overhead to production on the basis of direct l
ID: 2331373 • Letter: 2
Question
2. Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Adams incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Q#1. Compute the amount of overhead applied to jobs during the year. A. $396,000 B. $424,450 C. $413,190 D. $413,200. E. $403,200. Q#2. Compute the amount of under-or overapplied overhead for the year. A. $10,000 overapplied. B. $17,200 overapplied. C. $10,000 underapplied D. $17,200 underapplied. E. $4,800 underapplied.Explanation / Answer
Answer:
1
Calculation of the Overhead applied
=Actual Direct labor cost x Predetermined overhead rate
=224,000 x (Estimated Overhead cost / Estimated Direct labor cost)
=$224,000 x (396,000/220,000)
=$224,000 x 180%
=$403,200
Overhead applied =$403,200
___________________________________
2
Computation of the amount of under- or over applied overhead for the year.
Diffrance in Overhead
=Overhead Incurred - Overhead applied
=$413,200 - $403,200
=$10,000 under applied
under applied overhead for the year. =$10,000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.