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:

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit accounts columns to check the accuracy of financial transactions.

Work Sheet

An internal document or spreadsheet used by accountants to prepare financial statements and consolidate adjusting entries.

Income Statement Debit

A transaction or expense that decreases net income on the income statement.

Net Loss

The amount by which expenses exceed revenues.