Question

Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $189,000 of raw materials on credit; issued materials to production of $214,000 of which $11,000 were indirect. Minstrel incurred a factory payroll of $158,000, of which $21,000 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. If Minstrel incurred total overhead costs of $194,800 during the month, compute the amount of under- or overapplied overhead:

Answer 1

10,700 overapplied

Step-by-step explanation:

we are asked for overhead so any data that don't help with that is irrelevant

The applied MOH is done by this rate:

MOH = 150% Labor

So we need to calculate the direct labor:

Payroll - indirect labor = direct labor

158,000 - 21,000 = 137,000

Now we calculate the applied MOH

Applied MOH 137,000 * 150% = 205,500

Now we compare the Applied overhead with the actual overhead.

205,500-194,800=10,700

because applied is greater than actual the MHO is overapplied