Lonestar Corporation Uses a Job-Order Costing System to Account for Product

question 91

Multiple Choice

Lonestar Corporation uses a job-order costing system to account for product costs. The following information pertains to 2018: $$\begin{array} { l r } \text { Materials Placed into Froduction } & \$ 140,000 \\\text { Indirect Labor } & 40,000 \\\text { Direct Labor (10,000 hours) } & 160,000 \\\text { Depreciation of Factory Building } & 60,000 \\\text { Other Factory Overhead } & 100,000 \\\text { Increase in Work-in-Process Inventory } & 30,000\end{array}$$ Factory overhead rate is $18 per direct labor hour.
What is the amount of under- or overapplied overhead for Lonestar Corporation in 2018?

• A)$40,000 overapplied
• B)$20,000 overapplied
• C)$40,000 underapplied
• D)$20,000 underapplied

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