During 2020, Vaughn Manufacturing expected Job 59 to cost $276000 of overhead, $507000 of material, and $200000 in labour

Business Apr 02, 2021

During 2020, Vaughn Manufacturing expected Job 59 to cost $276000 of overhead, $507000 of material, and $200000 in labour. Vaughn applied overhead based on direct labour cost. Actual production required an overhead cost of $265000, $551000 in materials used; and $240000 in labour. All of the goods were completed. How much is the amount of over-/under-applied overhead?
a. $66200 under-applied b. $66200 over-applied c. $11000 under-applied d. $11000 over-applied

Expert Solution

Answer

Explanation

Computation of Under or Over Applied Overhead:

Overhead Rate = Estimated Overheads / Estimated Direct Labor Hour

= ($276,000 / $200,000) * 100

= 138% of Direct Labor Cost

Overheads Applied = $265,000

Actual Overhead ($240,000*138%) = $331,200

Over-applied Overhead ($331,200-$265,000) = $66,200

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote