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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

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Answer #1

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

Option a. is correct answer.

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

manufacturing overhead variance = Actual manufacturing overhead - Applied manufacturing overhead variance

= $172000-320000*0.50

= $12000 Underapplied

Option c. is correct answer.

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