Koebel Corp

Koebel Corp.uses a job order costing system with manufacturing overhead applied to products on the basis of direct labor hours.For the upcoming year,Koebel Corp.estimated total manufacturing overhead cost at $500,000 and total direct labor hours of 50,000.Koebel 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 $512,500 and 49,000 direct labor hours were used.
a.Calculate the predetermined overhead rate.
b.Calculate how much manufacturing overhead will be applied to production.
c.Is overhead over or underapplied? By how much?
d.What account should be adjusted for over or underapplied overhead? Should the balance be increased or decreased?

Correct Answer:

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a.$10
b.$490,000
c.$22,500 underapplied
...

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