Ask Question
15 November, 21:45

Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $204,000 of raw materials on credit; issued materials to production of $201,000 of which $24,000 were indirect. Minstrel incurred a factory payroll of $156,000, of which $34,000 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. If Minstrel incurred total overhead costs of $193,000 during the month, compute the amount of under - or overapplied overhead:

+4
Answers (1)
  1. 15 November, 21:59
    0
    The correct answer is Under applied OH of $10,000.

    Explanation:

    According to the scenario, the computation of the given data are as follows:

    we can calculate the under or over applied OH by using following formula:

    Over / Under applied OH = Applied OH - Actual OH incurred

    Where, Applied OH = Labor costs incurred * Application rate

    = ($156,000 - $34,000) * 150%

    = $122,000 * 150% = $183,000

    So, by putting the value in the formula, we get

    Over / Under applied OH = $183,000 - $193,000

    = - $10,000 (Negative sign shows Under applied)

    So, Under applied OH = $10,000.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $204,000 of raw materials on credit; issued ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers