Pocono Co.uses a standard costing system and a standard overhead rate of $12 per process hour.Pocono's Production Overhead account shows a debit of $365,780 for the month.The company produced 7,900 products and used 30,800 process hours.The standard for each product is 4 process hours.What amount did Pocono Co. credit to the Production Overhead account for the month?
A)$3,820.
B)$369,600.
C)$379,200.
D)$13,420.
E)None of the answers is correct.

Question

Quizplus · Accepted Answer

First, we need to calculate the total amount of overhead costs that Pocono Co. expected to incur based on the standard overhead rate:
Standard overhead rate = $12 per process hour
Expected overhead costs = Standard overhead rate x Actual process hours
Expected overhead costs = $12 x 30,800 = $369,600

Next, we need to calculate the amount of overhead that was over- or under-applied during the month:
Applied overhead costs = Actual process hours x Standard overhead rate
Applied overhead costs = 30,800 x $12 = $369,600
Overhead applied = Applied overhead costs - Actual overhead costs
Overhead applied = $369,600 - $365,780 = $3,820 over-applied

Finally, we need to determine the amount that Pocono Co. credited to the Production Overhead account for the month. Since the overhead was over-applied, it means that Pocono Co. credited less than the actual amount of overhead costs incurred:
Actual overhead costs = $365,780
Credited amount = Actual overhead costs - Overhead over-applied
Credited amount = $365,780 - $3,820 = $361,960

Therefore, the answer is (C) $379,200.

Pocono CoUses a Standard Costing System and a Standard Overhead Rate