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Question(s) / Instruction(s):

Actual Overhead for April 1 to April 30 2010 was $ 75,000, the variance to overhead brought to the income statement for the entire month was:

Simon Inc. is a home builder in Boca Raton, FL and uses job order system in which each home is a job. The WIP at the beginning of April 2010 was 0. The following events happening during the month of April 2010:

•             The company purchased $480,000 in raw material

•             Incurred construction wages were $220,000

•             It requisitioned direct material and labor into contraction of the following homes:

________________________Direct Materials____________ Direct Labor

The Baker Home                                      $58,000                                     $42,000

The Levine Home                                     $69,000                                     $33,000

The Gomez Home                                   $68,000                                     $50,000

The KonwufineHome                              $85,000                                    $53,000

Allocated overhead to jobs at a predetermined overhead rate of 40% of direct labor

•             The Baker Home and the Gomez Home were completed in April 2010

•             The Gomez Home was sold in April 2010 for $200,000.

a)            An under applied variance of $ 3,800

b)            An over applied variance of $ 3,800

c)            An under applied amount of $ 75,000

d)            An over applied amount of $ 75,000

 

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