Asked by Carolina Ochoa on May 27, 2024
Verified
The total manufacturing overhead is underapplied or overapplied by how much?
A) $9,216 Overapplied
B) $9,216 Underapplied
C) $47,940 Underapplied
D) $47,940 Overapplied
Overapplied
A situation where the overhead applied to products is greater than the actual overhead incurred.
Underapplied
Refers to a situation where the actual manufacturing overhead costs are higher than the overhead costs allocated to products during a specific period.
- Differentiate between underapplied and overapplied manufacturing overhead costs.
Verified Answer
MA
Mazia Abid AliMay 28, 2024
Final Answer :
B
Explanation :
From the given information, the manufacturing overhead is applied at a rate of $8 per direct labor hour.
Actual manufacturing overhead = $390,000
Actual direct labor hours = 28,800
Actual manufacturing overhead rate = Actual manufacturing overhead / Actual direct labor hours = $390,000 / 28,800 = $13.54 per direct labor hour
Applied manufacturing overhead = Actual direct labor hours x Predetermined manufacturing overhead rate = 28,800 x $8 = $230,400
Overhead variance = Actual manufacturing overhead - Applied manufacturing overhead
= $390,000 - $230,400 = $159,600
Since the actual manufacturing overhead rate is higher than the predetermined rate, there is an underapplied overhead. The answer is B, $9,216 underapplied.
Actual manufacturing overhead = $390,000
Actual direct labor hours = 28,800
Actual manufacturing overhead rate = Actual manufacturing overhead / Actual direct labor hours = $390,000 / 28,800 = $13.54 per direct labor hour
Applied manufacturing overhead = Actual direct labor hours x Predetermined manufacturing overhead rate = 28,800 x $8 = $230,400
Overhead variance = Actual manufacturing overhead - Applied manufacturing overhead
= $390,000 - $230,400 = $159,600
Since the actual manufacturing overhead rate is higher than the predetermined rate, there is an underapplied overhead. The answer is B, $9,216 underapplied.
Explanation :
Reference: APP10A-Ref24
(Appendix 9A)A manufacturer of industrial equipment has a standard costing system based on standard direct labor-hours (DLHs)as the measure of activity.Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period:
(Appendix 9A)A manufacturer of industrial equipment has a standard costing system based on standard direct labor-hours (DLHs)as the measure of activity.Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period:
Learning Objectives
- Differentiate between underapplied and overapplied manufacturing overhead costs.
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