Wyse Corp uses a normal job order costing system with manufacturing overhead app

Question

Wyse Corp uses a normal job order costing system with manufacturing overhead applied to products on the basis of direct labor hours. For the upcoming year, Wyse Corp estimated total manufacturing overhead cost at $851,700 and total direct labor hours of 50,100. Wyse Corp started the year with no beginning balances in either Work in Process Inventory or Finished Goods Inventory. During the year actual manufacturing overhead incurred was $836,600 and 47,800 direct labor hours were used.

Calculate how much manufacturing overhead will be applied to production. (Omit the "$" sign in your response.)

What account should be adjusted for over- or underapplied overhead? Should the balance be increased or decreased?

Explanation / Answer

Predetermined overhead rate = 851700/50100 = 17

Manufacturing overhead applied = 47800*17 = 812600

under applied by 836600-812600 = 24000

we should debit profit loss a/c by 24000

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