Larned Corporation recorded the following transactions for the just completed mo

Question

Larned Corporation recorded the following transactions for the just completed month.

a. $71,000 in raw materials were requisitioned for use in production. Of this amount, $62,000 was for direct materials and the remainder was for indirect materials.
b. Total labor wages of $112,000 were incurred. Of this amount, $101,000 was for direct labor and the remainder was for indirect labor.
c. Additional actual manufacturing overhead costs of $175,000 were incurred.
d. A total of $188,000 in manufacturing overhead was applied to jobs.

Determine the underapplied or over applied overhead for the month.

Explanation / Answer

a) Under applied overhead means that the overhead assigned to work in process is less than the overhead incurred. Overapplied overhead means that the overhead assigned to work in process is greater than the overhead incurred. Raw materials requisioned in production $71,000 Direct materails incurred amount $62,000 This is the overapplied . b) Total laborwages of $112,000 were incurred. For Direct labor $101,000 incurred. This is the overapplied. c) Additional actual manufacturing overhead costs of $175,000 were incurred. This is the under applied. If actuals is greater than applied. manufacturing overhead is underapplied. d) A Total of $188,000 in manufacturing overhead was applied to jobs. This is over applied. If actual is less than applied. manufacturing overhead is overapplied.

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