accounting problem 455756

Ravsten Company uses a job order costing system.

The company applies overhead cost to jobs on the basis of machine hours. For the current year, the company estimated that it would work 42,000 machine hours and incur $191,100 in manufacturing overhead cost. The following transactions occurred during the year:

a.

Raw materials requisitioned for use in production, $240,000 (75% direct and 25% indirect).

b.

The following costs were incurred for employee services:

Direct labor

$

166,000

Indirect labor

$

24,000

Sales commissions

$

16,000

Administrative salaries

$

31,000

c.

Heat, power, and water costs incurred in the factory, $48,000.

d.

Insurance costs, $16,000 (85% relates to factory operations, and 15% relates to selling and administrative activities).

e.

Advertising costs incurred, $56,000.

f.

Depreciation recorded for the year, $66,000 (80% relates to factory operations, and 20% relates to selling and administrative activities).

g.

The company used 46,000 machine hours during the year.

h.

Goods that cost $486,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.

i.

Sales for the year totaled $712,000. The total cost to manufacture these goods according to their job cost sheets was $481,000.

1.

Determine the underapplied or overapplied overhead for the year.