Perion Corporation Uses Direct Labor-Hours in Its Predetermined Overhead Rate

question 20

Multiple Choice

Perion Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 11,200 hours and the total estimated manufacturing overhead was $259,840. At the end of the year, actual direct labor-hours for the year were 10,800 hours and the actual manufacturing overhead for the year was $254,840. Overhead at the end of the year was:

• A) $4,280 overapplied.
• B) $9,280 overapplied.
• C) $9,280 underapplied.
• D) $4,280 underapplied.

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Definitions:

Consolidated Income Statement

A consolidated income statement presents the financial performance of a parent company and its subsidiaries as one combined entity.

Forward Exchange Contract

A financial agreement between parties to exchange currencies at a predetermined future date and rate.

Annual Interest Rate

The percentage of interest that will be earned or paid on investments or loans over a one-year period.

Foreign Currency Option

A financial contract which grants the owner the option, without being obliged, to convert funds in one currency to another at a set exchange rate on a determined date.