Use the Following Information for the Next 2 Questions

question 11

Multiple Choice

Use the following information for the next 2 questions.
Allen, Inc. has budgeted $120,000 in variable overhead and $72,000 in fixed overhead for the current month. 8,000 custom units were expected to be produced using 60,000 machine hours. During the month, Allen actually used 68,096 machine hours and produced 8,960 units. Actual overhead costs were: $132,000 variable and $73,600 fixed.
-Assume Allen uses an actual costing system. The amount of over- or underapplied overhead for the current month is

• A) $9,440 overapplied
• B) $12,307 overapplied
• C) $0
• D) $13,600 overapplied

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Definitions:

Total Sales

The aggregate revenue a company generates from selling goods or services within a specified period.

Fixed Costs

Costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.

Margin Of Safety

The difference between actual or expected sales and the break-even point, indicating the level of risk in failing to cover fixed costs.

Breakeven

The point at which total costs and total revenue are equal, resulting in no net loss or gain.