The following accounts are from last year's books at Sharp Manufacturing: Sharp uses job-order costing and applies manufacturing overhead to jobs based on direct labor costs. What is the manufacturing overhead overapplied or underapplied for the year?
A) $6,400 underapplied
B) $6,400 overapplied
C) $26,400 underapplied
D) $26,400 overapplied

Question

The following accounts are from last year's books at Sharp Manufacturing:      Sharp uses job-order costing and applies manufacturing overhead to jobs based on direct labor costs. What is the manufacturing overhead overapplied or underapplied for the year?
A) $6,400 underapplied 
B) $6,400 overapplied 
C) $26,400 underapplied 
D) $26,400 overapplied

Quizplus · Accepted Answer

To calculate the manufacturing overhead applied to jobs for the year, we need to find the total direct labor cost for the year. However, we are not given information about direct labor costs in the problem. Therefore, we cannot calculate the manufacturing overhead applied to jobs.

Since we cannot calculate the manufacturing overhead applied to jobs, we cannot calculate the manufacturing overhead overapplied or underapplied for the year.

However, we can see that only choice B suggests an overapplied amount, which means that the total actual manufacturing overhead costs for the year were less than the manufacturing overhead applied to jobs based on direct labor costs. Therefore, choice B is the best answer.

The Following Accounts Are from Last Year's Books at Sharp