Parker Company uses a job-order costing system and applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor-hours. Last year manufacturing overhead and direct labor-hours were estimated at $50,000 and 20,000 hours, respectively, for the year. In June, Job #461 was completed. Materials costs on the job totaled $4,000 and labor costs totaled $1,500 at $5 per hour. At the end of the year, it was determined that the company worked 24,000 direct labor-hours for the year and incurred $54,000 in actual manufacturing overhead costs.
Required:
a. Job #461 contained 100 units. Determine the unit product cost that would appear on the job cost sheet.
b. Determine the underapplied or overapplied overhead for the year.

Question

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The Answer of Parker Company uses a job-order costing system and applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor-hours. Last year manufacturing overhead and direct labor-hours were estimated at $50,000 and 20,000 hours, respectively, for the year. In June, Job #461 was completed. Materials costs on the job totaled $4,000 and labor costs totaled $1,500 at $5 per hour. At the end of the year, it was determined that the company worked 24,000 direct labor-hours for the year and incurred $54,000 in actual manufacturing overhead costs.
Required:
a. Job #461 contained 100 units. Determine the unit product cost that would appear on the job cost sheet.
b. Determine the underapplied or overapplied overhead for the year.

Parker Company Uses a Job-Order Costing System and Applies Manufacturing