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Collins Company Uses a Job Costing System and Allocates Overhead

question 52

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Collins Company uses a job costing system and allocates overhead using an estimated overhead allocation rate based on direct labour hours. Information for 2017 is as follows:  Estimated  Actual  Manufacturing overhead $166,500$165,000 Direct labour hours 50,00060,000\begin{array}{lrr}&\text { Estimated }&\text { Actual }\\\text { Manufacturing overhead } & \$ 166,500 & \$ 165,000 \\\text { Direct labour hours } & 50,000 & 60,000\end{array} The amount of over- or underapplied overhead for 2017 was:


Definitions:

Present Value

Today's value of a future money sum or cash flow sequence, calculated using a predetermined return rate.

Lifecycle

The series of stages that an entity—such as a product, project, or individual—goes through during its existence, from inception to termination or renewal.

Marginal Cost

The increase or decrease in the total cost that arises from producing one additional unit of a product or service.

Breakeven Price

The sales amount at which a business neither makes a profit nor incurs a loss, covering all its costs.

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