Heisenberg

Business

2 February, 12:40

Heathcote Corporation is a manufacturer that uses job - order costing. The company closes out any over-applied or under-applied overhead to Cost of Goods Sold at the end of the year.

Estimated total manufacturing overhead at the beginning of the year $546,000

Estimated direct labor-hours at the beginning of the year 42,000 direct labor-hours

Results of operation:

Actual direct labor-hours 47,000 direct labor-hours

Manufacturing overhead

Indirect labor cost $152,000

Other manufacturing overhead costs incurred $454,000

Cost of goods manufactured $1,569,000

Cost of goods sold (unadjusted) $1,458,000

Manufacturing overhead is overapplied or underapplied by:

A: $5,000 over-applied

B: $186,000 under-applied

C: $5,000 under-applied

D: $186,000 overapplied