Sai Company Uses a Job Order Cost System and Applies

question 52

Multiple Choice

Sai Company uses a job order cost system and applies manufacturing overhead costs to jobs using a predetermined overhead rate based on direct labour-hours. The following data were extracted from the company's accounting records for Year 6
$\begin{array}{|l|r|r|}\hline & \text { Estimated } & \text { Actual } \\\hline \begin{array}{l}\text { Manufacturing overhead } \\\text { costs }\end{array} & \$ 50,000 & \$ 54,000 \\\hline \text { Direct labour hours } & 20,000 \text { hours } & 24,000 \text { hours } \\\hline\end{array}$
Job \#461 was completed during the year and the following costs had been incurred on that job:
$\begin{array}{|l|r|}\hline \text { Direct materials: } & \$ 4,000 \\\hline \text { Direct labour: } & \$ 1,500 \text { (at } \$ 5.00 \text { per direct labour hour) } \\\hline\end{array}$

-What was the underapplied or over applied overhead for the year?

• A) $6,000 overapplied.
• B) $4,000 underapplied.
• C) $10,000 underapplied.
• D) $10,000 overapplied.

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Definitions:

Internal Competition

Describes a situation within an organization where employees or departments compete against each other for recognition, promotion, or rewards, which can either be motivating or destructive.

Differentiation Strategy

A business approach where a company develops unique products or services to stand out from its competitors, targeting specific market niches.

Distinctive

Characterized by a unique feature, quality, or characteristic that sets it apart from others.

Environmental Factors

External elements including climate, geography, and human influences that affect individuals and societies.