Minstrel Manufacturing uses a job order costing system. During one month Minstre
ID: 2547977 • 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, paid in cash, 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:
$2,800 overapplied.
$17,800 underapplied.
$2,800 underapplied.
$17,800 overapplied.
$57,200 overapplied.
$2,800 overapplied.
$17,800 underapplied.
$2,800 underapplied.
$17,800 overapplied.
$57,200 overapplied.
Explanation / Answer
Overhead applied = 110000*150% = 165000
Actual overhead = 167800
Under applied overhead = 165000-167800 = 2800
so answer is c) $2,800 underapplied.