Question at position 3 Better Products Company manufactures insulation and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $19 per direct labor-hour. The following data are obtained from the accounting records for October 2020:The actual amount of manufacturing overhead costs incurred in October 2020 totals: $118,000$157,000$114,000$262,400题目解析

Question

Question at position 3 Better Products Company manufactures insulation and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $19 per direct labor-hour. The following data are obtained from the accounting records for October 2020:The actual amount of manufacturing overhead costs incurred in October 2020 totals: $118,000$157,000$114,000$262,400题目解析

BlackTom AI · Accepted Answer

To tackle this question, I’ll first identify what constitutes manufacturing overhead for Better Products Company. In a standard cost system, overhead includes indirect costs such as indirect labor, plant rent, and depreciation on plant assets, excluding direct materials and direct labor.
Option 1: $118,000. This would be plausible if it included indirect labor ($21,000), plant rent ($51,000), and depreciation ($42,000) plus an additional item or misclassification. However, adding the listed manufacturing overhead components yields 21,000 + 51,000 + 42,000 = 114,000, so $118,000 would overstate the overhead by 4,000 and is not supported by the data provided.
Option 2: $157,000. This amount would require including more items than those labeled as manufacturing overhead or inflating one of them. The explicit overhead-related lines shown are only three: indirect labor, plant rent, and depreciation on plant machinery and equipment. The sum of those is 114,000, not 157,000, so this option is inconsistent with the given data.
Option 3: $114,000. This matches the sum of the three overhead components listed: indirect labor ($21,000) + plant facility rent ($51,000) + depreciation on plant machinery and equipment ($42,000) = 114,000. This aligns exactly with the data presented for manufacturing overhead.
Option 4: $262,400. This is far larger and would imply including non-overhead costs such as direct materials or selling/administrative expenses in manufacturing overhead, which is not appropriate. The figure 262,400 is not supported by the overhead components specified and would misclassify costs.
In summary, the only figure that coherently aggregates the listed manufacturing overhead items is $114,000, since indirect labor, plant rent, and depreciation on plant machinery and equipment total 114,000. The other options either overstate, misclassify, or rely on items not included in overhead.

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