Ansley Products Applies Overhead Using a Predetermined Overhead Rate

question 95

Multiple Choice

Ansley Products applies overhead using a predetermined overhead rate.Overhead is applied based on direct labor hours.At the beginning of the year, it is estimated that $500,000 in overhead will be incurred and 25,000 hours will be worked.At year-end, the company had used 24,000 hours of labor, and actual overhead costs were $470,000.What can be concluded from this?

• A)Cost control was good.
• B)Overhead is overapplied by $10,000.
• C)Overhead is underapplied by $10,000.
• D)Overhead is applied at a rate of $19.58 per hour

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Definitions:

Traditional Costing

A costing method that applies indirect costs to products based on a predetermined overhead rate, often not considering the actual activities that incur costs.

Overhead Assigned

The process of allocating manufacturing overhead costs to specific units of product based on a predetermined rate or method.

Product P9

A specific product or item identified as "P9," which could refer to a model or version in its respective context.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production, based on a particular activity base.