Question

Question 4 --/1 View Policies Current Attempt in Progress Bonita Music Company makes custom marimbas and xylophones. Since much of the work on these musical instruments is done by hand, the company uses direct labor hours as its manufacturing overhead application base. The company's annual budgeted overhead costs for 73,000 direct labor hours totaled $584,000. (a) Assume that during the year, the company incurred manufacturing overhead totaling $586,400 for 73,000 direct labor hours. By how much was manufacturing overhead under-or overapplied for the year? (Enter negative amount using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Overhead $ (b) Assume that during the year, the company incurred manufacturing overhead totaling $586,400 for 74,150 direct labor hours. By how much was manufacturing overhead under-or overapplied for the year? (Enter negative amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Overhead $ (c) Assume that during the year, the company incurred manufacturing overhead totaling $592,000 for 74,150 direct labor hours. By how much was manufacturing overhead under-or overapplied for the year? (Enter negative amount using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) 4 Overhead $

Answer 1

Answer:

Manufacturing Overhead rate = Budgeted Annual overhead costs / Budgeted Labor hours

                                                      = $584,000 / 73,000

                                                      = $8 per direct labor hour

Manufacturing Overheads applied = (Manufacturing overhead rate * Actual Direct Labors)

(a) If company actually incurred overhead costs $586,400 for 73,000 direct labors

Actual Manufacturing Overhead costs incurred = $586,400

Less: Manufacturing overhead applied ($8 * 73,000) = ($584,000)

                                              Under-applied Overheads   = $2,400

Under-applied Overhead

$2,400

(b) If company actually incurred overhead costs $586,400 for 74,150 direct labors

Actual Manufacturing Overhead costs incurred = $586,400

Less: Manufacturing overhead applied ($8 * 74,150) = ($593,200)

                                              Over-applied Overheads = ($6,800)

Over-applied Overhead

$6,800

(c) If company actually incurred overhead costs $592,00 for 74,150 direct labors

Actual Manufacturing Overhead costs incurred = $592,000

Less: Manufacturing overhead applied ($8 * 74,150) = ($593,200)

                                       Over-applied Overheads           = ($1,200)

Over-applied Overhead

$1,200