Sawyer Manufacturing Company Uses a Predetermined Overhead Rate Based on Direct

question 80

Multiple Choice

Sawyer Manufacturing Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. Last year, the company worked
57,000 actual direct labour hours and incurred $345,000 of actual manufacturing overhead cost. The Company had estimated that it would work 55,000 direct labour hours during the year and incur $330,000 of manufacturing overhead cost. The company's manufacturing overhead cost for the year was:

• A)overapplied by $3,000.
• B)underapplied by $3,000.
• C)overapplied by $15,000.
• D)underapplied by $15,000.

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Definitions:

Hyperinflation

Economic situation characterized by soaring prices.

Soaring Prices

A situation where the prices of goods and services rise rapidly and to unusually high levels.

Economic Situation

The state of economic conditions within a region, country, or the globe, encompassing factors like growth rates, employment, inflation, and markets.

Seasonal Unemployment

Joblessness of workers in a seasonal industry.