Question: Baxter Corp uses a normal job order costing system with manufacturing overhead applied to products on the basis of direct labor hours. For the upcoming

Baxter Corp uses a normal job order costing system with manufacturing overhead applied to products on the basis of direct labor hours. For the upcoming year, Baxter Corp estimated total manufacturing overhead cost at $480,000 and total direct labor hours of 40,000. During the year actual manufacturing overhead incurred was $462,500 and 41,000 direct labor hours were used.

a. Calculate the predetermined overhead rate.

b. Calculate how much manufacturing overhead will be applied to production.

c. Is overhead over- or underapplied? By how much?

d. What account should be adjusted for over- or underapplied overhead? Should the balance be increased or decreased?

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