During 2017, Ziplock Manufacturing expected Job No. 89 to cost $700,000 in overhead, $1,000,000 in direct materials, and $500,000 in direct labor. Ziplock used direct materials cost as the activity base. Actual production required $1,200,000 in direct materials, $420,000 in direct labor, and the job was completed in 2017. The amount of over - or under-applied overhead relative to this job is Select one: a. not able to be determined from the provided information. b. $260,000 over-applied. c. $140,000 over-applied. d. $140,000 under-applied. e. $260,000 under-applied.

Question

Hallie Le

Business

18 December, 21:56

During 2017, Ziplock Manufacturing expected Job No. 89 to cost $700,000 in overhead, $1,000,000 in direct materials, and $500,000 in direct labor. Ziplock used direct materials cost as the activity base. Actual production required $1,200,000 in direct materials, $420,000 in direct labor, and the job was completed in 2017. The amount of over - or under-applied overhead relative to this job is Select one: a. not able to be determined from the provided information. b. $260,000 over-applied. c. $140,000 over-applied. d. $140,000 under-applied. e. $260,000 under-applied.

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Answers (1)

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Kareem · Answer 1

a. not able to be determined from the provided information.

Explanation:

For determining the over applied or under applied, first, we have to compute the predetermined rate based on the direct material cost which is

= $700,000 : $1,000,000

= $0.70

Now the applied overhead is

= $0.70 * $1,200,000

= $840,000

And, the actual overhead amount is not given by which we can find out the underapplied or overapplied overhead amount

So, in this case, the correct option is a.