Final answer:
a) The overapplied overhead is $18,000. b) The total manufacturing overhead costs are $118,000. c) The overapplied overhead will decrease the cost of goods sold. d) The job-order costing system may need to be reviewed for accuracy.
Step-by-step explanation:
a) Underapplied or Overapplied Overhead:
- Actual Manufacturing Overhead Costs Incurred = $100,000
- Manufacturing Overhead Applied = $82,000
- To determine the underapplied or overapplied overhead, we subtract the Manufacturing Overhead Applied from the Actual Manufacturing Overhead Costs Incurred:
Underapplied/Overapplied Overhead = Actual Manufacturing Overhead Costs Incurred - Manufacturing Overhead Applied
Underapplied/Overapplied Overhead = $100,000 - $82,000
Underapplied/Overapplied Overhead = $18,000 (overapplied)
b) Total Manufacturing Overhead Costs:
To calculate the total manufacturing overhead costs, we add the Actual Manufacturing Overhead Costs Incurred to the Underapplied/Overapplied Overhead:
Total Manufacturing Overhead Costs = Actual Manufacturing Overhead Costs Incurred + Underapplied/Overapplied Overhead
Total Manufacturing Overhead Costs = $100,000 + $18,000
Total Manufacturing Overhead Costs = $118,000
c) Impact on the Cost of Goods Sold:
Since the overhead costs were overapplied, it means that more overhead costs were allocated to the products than were actually incurred. This would result in a decrease in the cost of goods sold since the excess overhead costs were not accounted for in the calculation.
d) Accuracy of the Job-Order Costing System:
The overapplication of overhead suggests that the job-order costing system overestimated the amount of overhead that should have been allocated to the products. This could indicate that the system needs to be reviewed and adjusted to ensure more accurate allocation of overhead costs.