Question 16 3 pts Mango Company applies overhead based on di

Question 16 3 pts Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $300,000, and direct labor costs to be $150,000. Actual overhead costs for the year totaled $330,000, and actual direct labor costs totaled $170,000. At year-end, the balance in the Factory Overhead account is a: $340,000 Credit balance. $170,000 Debit balance. $10,000 Credit balance. $10,000 Debit balance. $330,000 Debit balance.

Solution

Calculation of overheads rate;

Estimated overheads =$300,000

Estimated labour cost =$150,000

Overheads to be applied for $ of direct labour = $300,000/$150,000 =$2

Actual labour cost = $170,000

Overheads applied = $170,000*2 = $340,000

Less; actual overheads incurred = $330,000

Overapply of overheads = $10,000 credit balance

Overapply of overheads is credit balance

Ans) option C) $10,000 credit balance