.t eno.mheducation.com/hm.tpx abd Question 1 (of 3) value 10.00 points Durham Co

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.t eno.mheducation.com/hm.tpx abd Question 1 (of 3) value 10.00 points Durham Company uses a job-order costing system. The following transactions took place last year a. Raw materials requisitioned for use in production, sse,000 (75% direct and 25% indirect). b. Factory utility costs incurred, $16,200. c. Depreciation recorded on plant and equipmen 100e-fourths of the depreciation relates to factory equipment, and the remainder relates to selling and administrative equipment Costs for salaries and wages were incurred as follows s 68,000 19,600 11,600 $ 41,000 Direct labor Indirect labor Administrative salaries e insurance costs incurred. $62 0 75% relates to factory operatons, and 25% re amb se ling and adm strative act tes). f. Miscellaneous selling and administrative expenses incurred, $19,600. g. Manufacturing overhead was applied to production. The company applies overhead onthe basis of 130% ofdreet labor cost h. Goods that cost $146,000 to manufacture according to their job cost sheets were transterred to the inshed goods warehouse. i. Goods that had cost $136,000 to manufacture according to their job cost sheets were sold for $232,000 Required: 1. Determine the underapplied or overapplied overhead for the year

Explanation / Answer

Durham company:

A Overhead applied 130% of direct labor cost =56000*130% 72800 B Overhead incurred Particulars Amount Amount Indirect rawmaterials =56000*25% 14000 Factory utility 16200 Factory depreciation =31200*3/4 23400 Indirect labor 19600 Factory insurance =6200*75% 4650 Overhead applied 77850 C As OH applied is less than OH incurred, OH is under applied Under applied OH =77850-72800 5050

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