Reference: 03-02
Hamilton Company Uses Job-Order Costing Jobs 102, 103, and 104 Were Started During February

question 46

Multiple Choice

Reference: 03-02
Hamilton Company uses job-order costing. Manufacturing overhead is applied using a predetermined rate of
150% of direct labour cost. Any overapplied or underapplied manufacturing overhead is closed to the Cost of
Goods Sold account at the end of each month. Additional information is available as follows:
Job 101 was the only job in process at January 31. The job cost sheet for this job contained the following costs at the beginning of the month: $$\begin{array} { | l | l | } \hline \text { Direct materials } & \$ 4,000 \\\hline \text { Direct labour } & \$ 2,000 \\\hline \text { Applied manufacturing overhead } & \$ 3,000 \\\hline\end{array}$$ Jobs 102, 103, and 104 were started during February.
Direct materials requisitions for February totalled $26,000. Direct labour cost of $20,000 was incurred for February. Actual manufacturing overhead was $32,000 for February.
The only job still in process at February 28 was Job 104, with costs of $2,800 for direct materials and $1,800 for direct labour.
-For the month of February, the manufacturing overhead was:

• A)$1,000 overapplied.
• B)$2,000 underapplied.
• C)$2,000 overapplied.
• D)$700 overapplied.

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Definitions:

Financial Forecasts

Projections of a company's future income, expenses, and capital requirements, based on assumptions about economic conditions, market trends, and business operations.

Affiliate

A business enterprise located in one state that is directly or indirectly owned and controlled by a company located in another state. Also called foreign subsidiary.

Issuer

An issuer is an entity that releases securities into the market for investors to purchase, often to raise capital for the entity's operations or projects.

Control

refers to having the power to direct the management and policies of a company, often through the ownership of a majority of shares.