Question

the manufacturing overhead account shows debits of $240,000, $192,000, and $224,000 and one credit for $688,000. based on this information, was manufacturing overhead over- or underapplied and by how much?

Answer 1

The manufacturing overhead was overapplied by $32,000. Hence the correct choice of answer for this question would be option (b).

Give a brief account on manufacturing overhead.

Manufacturing overhead includes all incidental costs encountered during the production process. This overhead applies to units produced within a reporting period.

Some examples of costs that fall within the manufacturing overhead category are as follows:

• Depreciation may be applied to production-related equipment.
• property assessments for the manufacturing facility

• Rent on the manufacturing facility
• wages for maintenance workers
• Manufacturing managers' salaries
• salaries of the personnel in charge of materials
• salaries of the quality assurance personnel
• supplies not specifically related to the products
• Building janitorial staff's salaries

As direct materials and direct labor are generally considered to be the only costs that are directly applied to a unit of production, manufacturing overhead is becomes all of the indirect costs that a factory incurs.

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The complete question is mentioned below :

The Manufacturing Overhead account shows debits of $240,000, $192,000, and $224,000 and one credit for $688,000. Based on this information, was manufacturing overhead over- or underapplied and by how much?

a. $32,000 overapplied

b. $32,000 underapplied

c. Overhead has not yet been applied

d. Overhead is neither over- or underapplied