Wilson Enterprises Applies Overhead Based on Direct Labor Cost

question 68

Multiple Choice

Wilson Enterprises applies overhead based on direct labor cost.The company estimates that their overhead for the year will be $240,000,and direct labor cost to be $300,000.Actual direct labor cost for Martinez Manufacturing was $280,000 and actual overhead costs were $220,000.At the end of the year,manufacturing overhead was:

• A) Overapplied by $20,000.
• B) Underapplied by $20,000.
• C) Overapplied by $4,000.
• D) Underapplied by $4,000.

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Definitions:

Due Today

The amount of money that must be paid or is payable today.

Interest Free

Describes a loan or credit arrangement that does not require the borrower to pay interest on the borrowed amount.

Short Term Debt

Refers to any financial obligation that is due for repayment within one year.

Interest Rate

The portion of a loan subject to interest fees for the borrower, typically indicated as an annual percentage of the remaining loan principal.