Lonestar Corporation uses a job-order costing system to account for product cost
ID: 2546668 • Letter: L
Question
Lonestar Corporation uses a job-order costing system to account for product costs. The following information pertains to 2018:
$140,000
40,000
160,000
60,000
100,000
30,000
Factory overhead rate is $18 per direct labor hour.
What is the amount of under- or overapplied overhead for Lonestar Corporation in 2018?
$20,000 underapplied
$40,000 overapplied
$20,000 overapplied
$40,000 underapplied
Materials Placed into Production$140,000
Indirect Labor40,000
Direct Labor (10,000 hours)160,000
Depreciation of Factory Building60,000
Other Factory Overhead100,000
Increase in Work-in-Process Inventory30,000
Explanation / Answer
Under - or Overapplied overhead = Actual overhead - Applied overhead
Under - or Overapplied overhead = $200,000 - $180,000
Underapplied overhead = $20,000
Answer is a. $20,000 underapplied
Indirect labour $ 40,000 Depreciation of factory building $ 60,000 Other factory overheads $ 100,000 Total actual overhead $ 200,000Related Questions
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