(Appendix 11A)Nitrol Corporation manufactures brass vases using a standard cost system with standard machine-hours as the activity base for overhead.The following information relates to vase production at Nitrol for last year: The standard machine-hours per vase is 1.25.Last year Nitrol produced 84, 000 vases. What was Nitrol's total underapplied or overapplied overhead cost for last year?
A)$1, 060 overapplied
B)$1, 060 underapplied
C)$7, 940 overapplied
D)$13, 940 overapplied

Question

(Appendix 11A)Nitrol Corporation manufactures brass vases using a standard cost system with standard machine-hours as the activity base for overhead.The following information relates to vase production at Nitrol for last year:  The standard machine-hours per vase is 1.25.Last year Nitrol produced 84, 000 vases. What was Nitrol's total underapplied or overapplied overhead cost for last year?
A)$1, 060 overapplied 
B)$1, 060 underapplied 
C)$7, 940 overapplied 
D)$13, 940 overapplied

Quizplus · Accepted Answer

Standard overhead cost per hour = ($50, 000 + $250, 000)÷ 100, 000 hours = $3 per hour
Standard overhead cost applied = $3 per hour × (1.25 hours per vase × 84, 000 vases)= $3 per hour × 105, 000 hours = $315, 000
Total overhead cost incurred = $53, 560 + $247, 500 = $301, 060
Overhead overapplied = $315, 000 - $301, 060 = $13, 940

(Appendix 11A)Nitrol Corporation Manufactures Brass Vases Using a Standard Cost