Parker Corporation Has a Job-Order Costing System and Uses a Predetermined

question 174

Multiple Choice

Parker Corporation has a job-order costing system and uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. At the beginning of the year, manufacturing overhead and direct labor-hours for the year were estimated at $50,000 and 20,000 hours, respectively. In June, Job #461 was completed. Materials costs on the job totaled $4,000 and labor costs totaled $1,500 at $5 per hour. At the end of the year it was determined that the company worked 24,000 direct labor-hours for the year and incurred $54,000 in actual manufacturing overhead costs.The manufacturing overhead for the year was:

• A) $6,000 overapplied
• B) $10,000 overapplied
• C) $10,000 underapplied
• D) $4,000 underapplied

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Definitions:

World Price

World Price is the international market price of a good or service, determined by global supply and demand forces.

Domestic Supply

The total quantity of a product or service produced within a country and available for domestic consumption or sale.

Domestic Demand

The total demand for goods and services within a country's borders, not including exports or imports.

Import Quota

A government-imposed limit on the quantity of a certain type of good that can be imported into a country, aimed at protecting domestic industries and workers.