Question

For Eckstein Company, the predetermined overhead rate is 130% of direct labor cost. During the month, Eckstein incurred $100,000 of factory labor costs, of which $85,000 is direct labor and $15,000 is indirect labor. Actual overhead incurred was $115,000. Compute the amount of manufacturing overhead applied during the month. Determine the amount of under- or overapplied manufacturing overhead. (Weygandt, 12/2017, p. 20-31) Weygandt, J. J., Kimmel, P. D., Kieso, D. E. (2017). Accounting Principles, 13th Edition. [[VitalSource Bookshelf version]]. Retrieved from vbk://9781119411017 Always check citation for accuracy before use.

Answer 1

Answer:

Manufacturing overhead applied = $85,000 * 130%

Manufacturing overhead applied = $110,500

Under/Over-applied overhead = Manufacturing overhead - Actual overhead

Under/Over-applied overhead = $110,500 - $115,000

Under-applied overhead = $4,500

Hence, the Under applied manufacturing overhead is $4500