Dexter Corporation uses a standard cost system and applies manufacturing overhead cost to units of product on the basis of standard direct labor-hours (DLHs).Information on Dexter Corporation's manufacturing overhead costs for last period is given below: Given these data,the underapplied or overapplied overhead cost for the period would be:
A)$10,000 overapplied
B)$2,000 overapplied
C)$10,000 underapplied
D)$8,000 underapplied

Question

Dexter Corporation uses a standard cost system and applies manufacturing overhead cost to units of product on the basis of standard direct labor-hours (DLHs).Information on Dexter Corporation's manufacturing overhead costs for last period is given below:  Given these data,the underapplied or overapplied overhead cost for the period would be:
A)$10,000 overapplied 
B)$2,000 overapplied 
C)$10,000 underapplied 
D)$8,000 underapplied

Quizplus · Accepted Answer

Overhead applied = Predetermined overhead rate × Standard hours allowed for the actual output
= $4 per DLH × 38,000 DLHs = $152,000
Overhead is overapplied by $2,000 because the actual overhead cost incurred was $150,000.

Dexter Corporation Uses a Standard Cost System and Applies Manufacturing