(Appendix 10A) Arca Incorporated Makes a Single Product--A Critical Part

question 132

Multiple Choice

(Appendix 10A) Arca Incorporated makes a single product--a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below:

-The total manufacturing overhead is underapplied or overapplied by how much?

• A) $38,462 Underapplied
• B) $13,888 Underapplied
• C) $38,462 Overapplied
• D) $13,888 Overapplied

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Definitions:

Divergent Thinking

A thought process or method used to generate creative ideas by exploring many possible solutions, emphasizing spontaneity and non-linear approaches.

Heuristic

A rule of thumb that is derived from experience and used in decision making and problem solving, even though there is no guarantee of its accuracy or usefulness.

Insightful

Having or showing an accurate and deep understanding; perceptive.

Convergent

Relating to or involving the coming together of lines, ideas, or pieces of information so they eventually merge.