Innovative Metal Products Company manufactures pipes and applies manufacturing c
ID: 2532553 • Letter: I
Question
Innovative Metal Products Company manufactures pipes and applies manufacturing costs to production at a budgeted indirect-cost rate of $12 per direct labor-hour. The following data are obtained from the accounting records for June 2018 Direct materials Direct labor (16,000 hours @ $11/hour) Indirect labor Plant facility rent Depreciation on plant machinery and equipment Sales commissions Administrative expenses $400,000 240,000 25,000 100,000 $ 42,000 $ 30,000 $ 40,000 Required: a. What actual amount of manufacturing overhead costs was incurred during June 2018? b. What amount of manufacturing overhead was allocated to all jobs during June 2018? c. For June 2018, was manufacturing overhead underallocated or overallocated? Explain.Explanation / Answer
Answer:
A)
a. What actual amount of manufacturing overhead costs was incurred during June 2018?
Indirect labor 25,000
Plant facility rent 100,000
Deprecation 42000
Overhead cost incurred 167,000
Amount of manufacturing overhead costs was incurred during June 2018=$167,000
b. What amount of manufacturing overhead was allocated to all jobs during June 2018?
Manufacturing overhead was allocated
=labor hour x Overhead rate
=16,000x12
=192,000
Manufacturing overhead was allocated =$192,000
c. For June 2018, was manufacturing overhead under allocated or over allocated?
Was manufacturing overhead over allocated
=192000-167000
=$25,000
Manufacturing overhead Over allocated by $25,000