Randall Company Manufactures Products to Customer Specifications The Amount of Underapplied or Overapplied Overhead Is:
A)$60,000 Overapplied

question 15

Multiple Choice

Randall Company manufactures products to customer specifications. A job costing system is used to accumulate production costs. Factory overhead cost was applied at 125% of direct labor cost. Selected data concerning the past year's operation of the company are presented below. $\begin{array}{lrrr} & \text { January 1 } & \text { December 31 } \\\text { Direct materials } & \$ 77,000 & \$ 40,000 \\\text { Work in process } & 66,000 & 42,000 \\\text { Finished goods } & 115,000 & 100,000\\\text { Other information }\\\text { Direct materials purchases } && \$ 324,000 \\\text { Cost of goods available for sale } && 950,000 \\\text { Actual factory overhead costs } && 260,000\end{array}$ The amount of underapplied or overapplied overhead is:

• A)$60,000 overapplied.
• B)$60,000 underapplied.
• C)$10,000 overapplied.
• D)$10,000 underapplied.
• E)$0.

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholder members as a distribution of profits.

Operating Expenses

Costs associated with a company's day-to-day operational activities, excluding direct labor, direct materials, and direct expenses.

Prepaid Expenses

Payments made in advance for goods or services to be received in the future.

Accrued Expenses

Expenses incurred but not yet paid in cash or recorded.