Collins Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs.The following information applies to the Corporation for the current year: The manufacturing overhead cost for the current year will be:
A)$17,000 overapplied
B)$17,000 underapplied
C)$55,000 overapplied
D)$55,000 underapplied

Question

Collins Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs.The following information applies to the Corporation for the current year:  The manufacturing overhead cost for the current year will be:
A)$17,000 overapplied 
B)$17,000 underapplied 
C)$55,000 overapplied 
D)$55,000 underapplied

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $240,000 ÷ $300,000 = 0.80
Overhead over or underapplied
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Collins Corporation Uses a Predetermined Overhead Rate Based on Direct