Question

XYZ Company uses a job costing system and applies manufacturing overhead using a predetermined overhead rate...

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


Homework Answers

Answer #1
Particulars OMR
Estimated manufacturing overhead OMR        65,000
Estimated direct labor hours OMR        20,000

Predetermined overhead rate

(65000/20000)

OMR            3.25
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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