Question

Aspen Company estimates its manufacturing overhead to be $1,271,000 and its direct labor costs to be $620,000 for year 2. Aspen worked on three jobs for the year. Job 2-1, which was sold during year 2, had actual direct labor costs of $184,000. Job 2-2, which was completed, but not sold at the end of the year, had actual direct labor costs of $309,000. Job 2-3, which is still in work-in-process inventory, had actual direct labor costs of $134,000. Actual manufacturing overhead for year 2 was $1,200,000. Manufacturing overhead is applied on the basis of direct labor costs.

Required:

a. How much overhead was applied to each job in year 2?

b. What was the over- or underapplied manufacturing overhead for year 2?

Answer 1