Minstrel Manufacturing uses a job order costing system. During one month, Minstr
ID: 2546516 • Letter: M
Question
Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. If Minstrel incurred total overhead costs of $167,800 during the month, compute the amount of under- or overapplied overhead:
Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit, issued materials to production of S195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which S40.000 was indirect labor, Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. lf Minstrel incurred total overhead costs of $167800 during the month, compute the amount of under or overapplied overhead: Multiple Choice 52.800 overapplied. 517,800 underapplied. $2,800 underapplied 517,800 overapplied. 557,200 overapplied.Explanation / Answer
Actual overhead=$167800 Overhead applied=(150000-40000)*150%= $165000 Underapplied overhead=167800-165000 = $2800 Option 3 is correct