Chapter 12, Problem 12.8AP

A Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company estimated manufacturing overhead at $225,000 for the year and direct labor hours a 100,000. Actual manufacturing overhead costs incurred during the year totaled $270,000. Actual direct labor hours were 105,000. What was the overapplied or underapplied overhead for the year?

What is its operating leverage?

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What would be the cost of beginning work in process inventory for the department?

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