XYZ Company uses a job costing system and applies manufacturing overhead using a predetermined overhead rate based on direct labor hours. Information for the current year is as follows: Estimated manufacturing overhead OMR65,000; Actual manufacturing overhead OMR70,000; Estimated direct labor hours 20,000; Actual direct labor hours 22,000. The amount of over- or underapplied overhead for the year was Select one:
a. OMR1,500 underapplied
b. None of the answers given
c. OMR5,500 overapplied
d. OMR5,000 overapplied
e. OMR5,000 underapplied
f. OMR1,500 overapplied
|Estimated manufacturing overhead||OMR 65,000|
|Estimated direct labor hours||OMR 20,000|
Predetermined overhead rate
|Actual direct labor hours||OMR 22,000|
|Overhead applied||OMR 71,500|
|Actual manufacturing overhead||OMR 70,000|
|Overhead overapplied||OMR 1,500|
Hence option F is correct.
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