is a manufacturer that uses job-order costing. The company closes out any overap

Question

is a manufacturer that uses job-order costing. The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year. The company has supplied the Corporation following data for the just completed year: Estimated total manufacturing overhead at the beginning of the year S 546,000 direct labor hours Estimated direct labor-hours at the beginning of the year 42,000 Results of operations: Actual direct labor hours Manufacturing overhead: Indirect labor cost Other manufacturing overhead costs incurred Cost of goods manufactured Cost of goods sold (unadjusted) 47,000 direct labor-hours Manufacturing overhead is overapplied or underapplied by Select one: O a. $186,000 Overapplied O b. S5,000 Underapplied O c. $186,000 Underapplied O d. S5,000 Overapplied 152,000 454,000 1,569,000 1,458,000

Explanation / Answer

Predetermine overhead rate = 546000/42000 = 13 per labour hour

Actual overhead cost = (152000+454000) = 606000

Applied overhead = (47000*13) = 611000

Over applied overhad = 611000-606000 = 5000

so answer is d) $5000 overapplied

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