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 $197,000 of raw materials on credit; issued materials to production of $206,000 of which $19,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of which $29,000 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 $183,000 during the month, compute the amount of under- or overapplied overhead:

Explanation / Answer

direct labor cost = 150,000 - 29,000 = 121,000 applied overhead = 121,000*1.5 = 181,500 183,000 - 181,500 = 1,500 underapplied answr: underapplied $1,500

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