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 $190,000 of raw materials on credit; issued materials to production of $213,000 of which $12,000 were indirect. Bard incurred a factory payroll of $157,000, paid in cash, of which $22,000 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 $194,100 during the month, compute the amount of under- or overapplied overhead

Explanation / Answer

Bard manufacturing Cost

Direct labour cost 135,000 (157,000-22,000)

Predetermined Overhead 150% of 135,000 = 202,500

Total overhead incurred 194,100

Under applied overhead 8,400

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