Karvel Corporation Uses a Predetermined Overhead Rate Based on Machine-Hours

question 160

Multiple Choice

Karvel Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. For the month of August, Karvel estimated total manufacturing overhead costs at $300,000 and total machine-hours at 75,000 hours. Actual results for the period were manufacturing overhead costs of $290,000 and 75,000 machine-hours. As a result, Karvel would have:

• A) applied more overhead to Work in Process than the actual amount of overhead cost for the year.
• B) applied less overhead to Work in Process than the actual amount of overhead cost for the year.
• C) applied an amount of overhead to Work in Process that was equal to the actual amount of overhead.
• D) found it necessary to recalculate the predetermined overhead rate.

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Definitions:

Individual Rights

Rights that are guaranteed to individuals, typically protecting them from government infringement.

Necessary and Proper Clause

A provision in the U.S. Constitution granting Congress the power to pass all laws deemed necessary and proper for carrying out its duties.

Congress Powers

The legislative powers granted to the U.S. Congress by the Constitution, including taxing, spending, and regulating interstate commerce.

Rational Basis Test

A standard of judicial review that requires a law to be rationally related to a legitimate government interest.