Larned Corporation recorded the following transactions for the just completed mo

Question

Larned Corporation recorded the following transactions for the just completed month.
a. $72,000 in raw materials were requisitioned for use in production. Of this amount, $62,300 was for direct materials and the remainder was for indirect materials.
b. Total labor wages of $113,900 were incurred. Of this amount, $100,500 was for direct labor and the remainder was for indirect labor.
c. Additional manufacturing overhead costs of $175,600 were incurred.
d. A total of $188,000 in manufacturing overhead was applied to jobs.

1. Determine the underapplied or overapplied overhead for the month.

Explanation / Answer

                                                              Indirect
Direct Materials  ($72,000 - $62,300)        $9,700
Labor wages       ($113,900 -$100,500)    $13,400   
Other Manufacturing costs                     $175,600
                                                         __________
Total overheads incurred                       $198,700  
Less : Overheads applied                     $188,000
Overheads under applied                    $10,700
                                                          =========

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