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Trinh? Gia Bao? Ngoc (FU HN)
on Dec 17, 2024

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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

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products, calculated at the beginning of the period based on estimated costs and activity levels.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the manufacturing process or providing a service.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, indirect labor, and materials.

  • Acquire knowledge on how to calculate the predetermined overhead rate in a manufacturing context.
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TT
Tracy ThurmanDec 18, 2024
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