Bard Manufacturing uses a job order cost accounting system. During one month Bar

Question

Bard Manufacturing uses a job order cost accounting system. During one month Bard purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application rate of 150% of direct labor cost. If Bard incurred total overhead costs of $167,800 during the month, compute the amount of under- or overapplied overhead:

Explanation / Answer

Under applied or overapplied overhead = actual overhead - standard overhead = 167800 - (150000-40000)*150% = 2800 overapplied overhead

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