Minstrel Manufacturing Uses a Job Order Costing System

Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost.
- If Minstrel incurred total overhead costs of $167,800 during the month, compute the amount of under- or overapplied overhead:

A) $57,200 overapplied.
B) $2,800 underapplied.
C) $17,800 overapplied.
D) $2,800 overapplied.
E) $17,800 underapplied.

Correct Answer:

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