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1. Job-Order Costing : At the beginning of the year, Creative, Inc. computed its overhead rate...

1. Job-Order Costing : At the beginning of the year, Creative, Inc. computed its overhead rate based on $180,000 of estimated total manufacturing overhead costs for an estimated activity level of 12,000 direct labor-hours. During the year, the company incurred actual manufacturing overhead costs of $195,000 and 9,500 total direct labor-hours.

a. What is the company’s predetermined overhead rate?

b. What is the amount of manufacturing overhead applied by the company for the period?

c. What is the amount of manufacturing overhead overapplied or underapplied by the company for the period?

Enter final answer: Manufacturing overhead is ___________ applied by $_____________. (under/over)

d. Assume the entire amount of the underapplied or overapplied overhead is closed out to cost of goods sold. What would be the effect of this adjustment on the company’s net income for the period (increase/decrease/no effect)?

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