Filex Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $18 per direct labor-hour. The following data are obtained from the accounting records for June 2014:
$\begin{array}{lr}
\text { Direct materials } & \$ 140,000 \
\text { Direct labor (4,000 hours @ } \$ 10 / \text { hour) } & 40,000 \
\text { Indirect labor } & 13,000 \
\text { Flant facility rent } & 30,000 \
\text { Depreciation on plant machinery and equipment } & 22,500 \
\text { Sales commissions } & 24,000 \
\text { Administrative expenses } & 28,000
\end{array}$
-For June 2014,manufacturing overhead is ________.

Question

Filex Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $18 per direct labor-hour. The following data are obtained from the accounting records for June 2014:
 $\begin{array}{lr}
\text { Direct materials } & \$ 140,000 \
\text { Direct labor (4,000 hours @ } \$ 10 / \text { hour) } & 40,000 \
\text { Indirect labor } & 13,000 \
\text { Flant facility rent } & 30,000 \
\text { Depreciation on plant machinery and equipment } & 22,500 \
\text { Sales commissions } & 24,000 \
\text { Administrative expenses } & 28,000
\end{array}$
-For June 2014,manufacturing overhead is ________.

Quizplus · Accepted Answer

Manufacturing overhead is applied at a rate of $18 per direct labor-hour. For June 2014, 4,000 direct labor-hours were worked, so the applied manufacturing overhead is $18 x 4,000 = $72,000. The actual manufacturing overhead costs for June 2014 are $13,000 + $30,000 + $22,500 = $65,500. Therefore, manufacturing overhead is overallocated by $72,000 - $65,500 = $6,500.

Filex Company Manufactures Pipes and Applies Manufacturing Overhead Costs to Production