Kimble Company Applies Overhead on the Basis of Machine Hours

question 116

Multiple Choice

Kimble Company applies overhead on the basis of machine hours. Given the following data, compute overhead applied and the under- or overapplication of overhead for the period:

• A) $1,140,000 applied and $15,000 overapplied
• B) $1,200,000 applied and $15,000 overapplied
• C) $1,140,000 applied and $15,000 underapplied
• D) $1,145,000 applied and neither under- nor overapplied

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Definitions:

Total Weight

The combined mass of all the components or elements of an item or shipment, often measured in pounds or kilograms.

Direct Labor Dollars

The total cost of wages paid to employees who are directly involved in the manufacturing process.

Absorption Cost

A comprehensive approach to product costing that includes all types of manufacturing costs: direct materials, direct labor, and both fixed and variable manufacturing overhead.

Overhead Absorption Rate

The rate at which indirect costs are allocated to produced goods or services.