Parker Corporation has a job-order costing system and uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. At the beginning of the year, manufacturing overhead and direct labor-hours for the year were estimated at $50,000 and 20,000 hours, respectively. In June, Job #461 was completed. Materials costs on the job totaled $4,000 and labor costs totaled $1,500 at $5 per hour. At the end of the year it was determined that the company worked 24,000 direct labor-hours for the year and incurred $54,000 in actual manufacturing overhead costs.The manufacturing overhead for the year was:
A) $6,000 overapplied
B) $10,000 overapplied
C) $10,000 underapplied
D) $4,000 underapplied

Question

Quizplus · Accepted Answer

The predetermined overhead rate is $50,000 / 20,000 hours = $2.50 per hour. The actual overhead costs for the year are $54,000. The applied overhead costs for the year are $2.50 per hour * 24,000 hours = $60,000. The manufacturing overhead for the year is $60,000 - $54,000 = $6,000 overapplied.

Parker Corporation Has a Job-Order Costing System and Uses a Predetermined