A Manufacturing Company Applies Factory Overhead Based on Direct Labor

question 174

Multiple Choice

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual factory overhead costs incurred were $377,200, and actual direct labor hours were 36,000. What is the amount of overapplied or underapplied manufacturing overhead at the end of the year?

• A) $6,000 overapplied
• B) $6,000 underapplied
• C) $54,800 overapplied
• D) $54,800 underapplied

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Definitions:

Intrinsic Motive

The internal drive to perform an activity for its inherent enjoyment and satisfaction, rather than for some separable consequence.

Financial Security

The state of having enough resources to cover living expenses and unforeseen emergencies, without constant worry about money.

Crystallized Intelligence

The ability to use learned knowledge and experience.

Fluid Intelligence

Mental flexibility; the ability to process information rapidly.