Question

# Mansfield Corporation estimates its manufacturing overhead costs to be \$160,000 and its direct labor costs to...

Mansfield Corporation estimates its manufacturing overhead costs to be \$160,000 and its direct labor costs to be \$320,000 for 2019. The actual manufacturing labor costs were \$80,000 for job 1, \$120,000 for job 2 and \$160,000 for job 3 during 2019. Manufacturing overhead is applied to jobs on the basis of direct labor costs using a predetermined overhead rate. The actual manufacturing overhead cost for the year was \$172,000.

6. The amount of overhead assigned to Job 3 during 2007 was:
a. \$80,000
b. \$320,000
c. \$160,000
d. \$71,110

7. The amount of the manufacturing overhead variance during 2019 was:
a. \$8,000 Overapplied
b. \$12,000 Overapplied
c. 12,000 Underapplied
d. \$8,000 Underapplied

6. Predetermined overhead rate = Estimated manufacturing overhead costs / estimated direct labor costs

= \$160000/320000 = \$0.50

overhead assigned to Job 3 = actual manufacturing labor costs*Predetermined overhead rate

= \$160000*0.50

= \$80000

7. Total actual manufacturing labor costs = \$80000+120000+160000 = \$320,000

= \$172000-320000*0.50

= \$12000 Underapplied

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