Kirkaid Company recorded the following transactions for the just completed month
ID: 2421560 • Letter: K
Question
Kirkaid Company recorded the following transactions for the just completed month: a. dollar116,000 in raw materials were requisitioned for use in production. Of this amount, dollar88,000 was for direct materials and the remainder was for indirect materials. b Total labor wages of dollar140,000 were incurred. Of this amount dollar121,000 was for direct labour and the remainder was for indirect labor. c. Additional actual manufacturing overhead costs of dollar213,000 were incurred. d. A total of dollar267,000 in manufacturing overhead was applied to jobs. Required: Determine the underapplied or overapplied overhead for the monthExplanation / Answer
Solution.
Material :- $116,000
Direct = $88,000
Indirect = $28,000
Labour :- $140,000
Direct = $121,000
Indirect = 19,000
Additional actual manufactureing overhead incurred = $213,000
Total Actual overhead for the month is = $28,000 +$19,000 + $213,000 = $260,000
Budgeted overhead = $267,000
That means overhead under applied by $7,000.
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