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:
A) $330,000 Debit balance.
B) $170,000 Debit balance.
C) $10,000 Credit balance.
D) $340,000 Credit balance.
E) $10,000 Debit balance.
C) $10,000 Credit balance.
Explanation: Predetermined overhead rate = $300,000 estimated overhead cost / $150,000
estimated direct labor cost = 200%
Applied overhead = $170,000 actual direct labor cost × 200% = $340,000.
Overhead incurred, $330,000 – Overhead applied, $340,000
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