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Bookmark question for later For the year, Jay Bug Company had actual manufacturing overhead of $100,000....

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    For the year, Jay Bug Company had actual manufacturing overhead of $100,000. Based on its estimated predetermined overhead rate, Jay Bug Company applied a total of $117,000 in manufacturing overhead cost to its customer orders during the year.

    Which ONE of the following statements is MOST LIKELY to be TRUE?
    • Jay Bug Company spent $17,000 MORE on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too HIGH.
    • Jay Bug Company spent $17,000 LESS on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too LOW.
    • Jay Bug Company spent $17,000 LESS on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too HIGH.
    • Jay Bug Company spent $17,000 MORE on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too LOW.
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Answer #1

Solution:Option (c)

Jay Bug company Applied a total of $117000 in manufacturing overhead cost to its customers during the year whereas it's actual expenses amounted to $100000 which clearly indicates that the company has spent $17000 less on manufacturing overhead during the year than was added to the cost of customer orders.

Since an extra $17000 was applied to the manufacturing overhead cost to its customers than was actually spent it is clear ,that to match the cost the company would have set the selling prices too HIGH than what it should have been.

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