THE FOLLOWING INFORMATION IS USED FOR QUESTIONS 5 6.

Test Company uses a normal, functional-based cost system to determine product cost. The company estimated the following amounts for the current year.

	Department 1	Department 2	Total
Overhead	$200,000	$300,000	$500,000
Direct labor hours	40,000	60,000	100,000
Machine hours	25,000	15,000	40,000

Test Company reported the following actual amounts for July.

	Department 1	Department 2	Total
Prime cost	$25,000	$20,000	$45,000
Overhead	$16,000	$20,000	$36,000
Direct labor hours	3,000	5,500	8,500
Machine hours	2,000	1,500	3,500

Assume that Test Company uses a plant-wide overhead rate based on direct labor hours to apply overhead.

5. Determine the total product cost for July.

Note: Give your answer using dollar signs and commas but no decimal points (cents).

Example: $12,345

6.

Assume that Test Company used departmental overhead rates to apply overhead. Overhead in Department 1 is applied based on machine hours. Overhead in Department 2 is applied based on direct labor hours. Determine the total product cost for July.

Note: Give your answer using dollar signs and commas but no decimal points (cents).

Example: $12,345

7. Test Company reported the following amounts.

Estimated overhead	$150,000
Applied overhead	$145,000
Actual overhead	$160,000

Determine the overhead variance.

	a.	$5,000 overapplied
	b.	$15,000 underapplied
	c.	$10,000 underapplied
	d.	$15,000 overapplied