Precision Corporation Used a Predetermined Overhead Rate Last Year of $3

question 219

Multiple Choice

Precision Corporation used a predetermined overhead rate last year of $3 per direct labor-hour,based on an estimate of 24,000 direct labor-hours to be worked during the year.Actual costs and activity during the year were:
The overapplied or underapplied manufacturing overhead for the year was:

• A) $3,000 underapplied
• B) $3,000 overapplied
• C) $12,000 underapplied
• D) $12,000 overapplied

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Definitions:

Withdrawals

The act of taking money out of an account, fund, or similar financial vehicle.

Invest

To allocate money in the expectation of some benefit in the future, usually through the purchase of assets with the hope that they will increase in value.

Ordinary Annuity

Continuous uniform payouts effected at every period’s cessation over a stipulated time frame.

Compounded Quarterly

A method of calculating interest where the interest earned is added to the principal four times a year, leading to interest on interest.