Magenta Ltd uses a job order costing system and applies factory overhead, based on direct labour hours, at a rate of $2 per direct labour hour. The data relating to production for last period is:
Direct materials $13 000
Indirect materials 2300
Direct labour (18 000 hours) 54 000
Production supervisor salaries 13 700
Maintenance costs 7000
Factory rent 8100
Factory utilities 1800
Depreciation on machinery 2200
The overhead under or overapplied after overhead has been charged to production is:

Question

Quizplus · Accepted Answer

Factory overhead applied = Direct labour hours x Factory overhead rate= 18,000 x $2= $36,000Actual factory overhead = Indirect materials + Production supervisor salaries + Maintenance costs + Factory rent + Factory utilities + Depreciation on machinery= $2,300 + $13,700 + $7,000 + $8,100 + $1,800 + $2,200= $35,100Overhead under or overapplied = Factory overhead applied - Actual factory overhead= $36,000 - $35,100= $900 overapplied

Magenta Ltd Uses a Job Order Costing System and Applies