Plasencia Corporation is a manufacturer that uses job-order costing.The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year.The company has supplied the following data for the just completed year:
Results of operations:
The net operating income is:
A) $1,318,000
B) $1,008,000
C) $728,000
D) $1,038,000

Question

Plasencia Corporation is a manufacturer that uses job-order costing.The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year.The company has supplied the following data for the just completed year:
 Results of operations:
 The net operating income is:
A) $1,318,000 
B) $1,008,000 
C) $728,000 
D) $1,038,000

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base
= $635,500 ÷ 41,000 direct labor-hours = $15.50 per direct labor-hour
Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred
= $15.50 per direct labor-hour × 42,000 direct labor-hours = $651,000
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Plasencia Corporation Is a Manufacturer That Uses Job-Order Costing