Rumington Popcorn Uses a Standard Cost System and Applies Overhead

question 5

Multiple Choice

Rumington Popcorn uses a standard cost system and applies overhead on a per unit basis. The company estimated that 30,000 units would be produced in 2014 and uses this quantity to establish its standard overhead cost per unit. The cost formula for overhead costs used to develop the standard overhead cost per unit was:
Overhead = $120,000 + $6 per unit
During the year, actual overhead cost was $340,000. Actual units produced were 32,000. How much is the amount of under or over applied overhead for 2014?

• A) $20,000 overapplied
• B) $20,000 underapplied
• C) $28,000 overapplied
• D) $28,000 underapplied

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Definitions:

Parenteral Nutrition

Nutritional support given intravenously, bypassing the digestive tract, used for patients who cannot or should not get their nutrition orally.

Parenteral Nutrition

A method of feeding that bypasses the gastrointestinal tract, delivering nutrients directly into the bloodstream through intravenous infusion to meet nutritional needs.

Bloodstream Infection

An infection that occurs when bacteria or viruses enter the blood, leading to potentially serious conditions.

Pneumothorax

The presence of air or gas in the pleural space that causes the lung to collapse, potentially leading to respiratory distress.