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

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.