Adams Manufacturing Allocates Overhead to Production on the Basis of Direct

question 7

Multiple Choice

Adams Manufacturing allocates overhead to production on the basis of direct labor costs.At the beginning of the year,Adams estimated total overhead of $396,000;materials of $410,000 and direct labor of $220,000.During the year Adams incurred $418,000 in materials costs,$413,200 in overhead costs and $224,000 in direct labor costs.Compute the amount of under- or overapplied overhead for the year.

• A)$10,000 overapplied.
• B)$17,200 overapplied.
• C)$10,000 underapplied.
• D)$17,200 underapplied.
• E)$4,800 underapplieD.OH rate = $396,000/$220,000 = 180%

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Definitions:

Atm

A unit of pressure defined as exactly equal to 101,325 Pa, representing atmospheric pressure at sea level.

Temperature

A measure of the thermal energy of an object or substance, indicative of how hot or cold it is, typically measured in degrees Celsius, Fahrenheit, or Kelvin.

Helium Gas

A colorless, odorless, tasteless, non-toxic, inert, monatomic gas, the first in the noble gas group in the periodic table. Its boiling and melting points are the lowest among the elements.

Atm

A unit of pressure; standard atmosphere, approximately equal to the Earth's atmospheric pressure at sea level (101.325 kPa).