Hancock Manufacturing Allocates Overhead to Production on the Basis of Direct

question 91

Multiple Choice

Hancock Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Hancock estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Hancock incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Compute the amount of under- or overapplied overhead for the year.

• A) $10,000 overapplied.
• B) $17,200 overapplied.
• C) $10,000 underapplied.
• D) $17,200 underapplied.
• E) $4,800 underapplied.

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Definitions:

Crystallized Intelligence

The ability to use learned knowledge and experience, which typically increases or remains stable over the lifespan.

Diverge

To move or extend in different directions from a common point, or to differ in opinion or character.

Converge

To move towards one point from different places or ideas; to come together and meet or unite in a point or purpose.

PFIT Theory

Stands for Parieto-Frontal Integration Theory, which suggests that intelligence involves the integration of information between parietal and frontal brain regions.