Beaver Company Used a Predetermined Overhead Rate Last Year of $2

question 59

Multiple Choice

Beaver Company used a predetermined overhead rate last year of $2 per direct labour hour based on an estimate of 25,000 direct labour hours to be worked during the year.Actual costs and activity during the year were:
What was the under- or overapplied overhead last year?

• A) $1,000 underapplied.
• B) $1,000 overapplied.
• C) $2,000 underapplied.
• D) $3,000 overapplieD. (24,000@ $2)- 47,000 = $1,000 overapplied

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Definitions:

Cost Of Goods Sold

The costs directly related to the creation of products sold by a company, including expenses for raw materials and wages.

Worksheet

A paper or electronic tool used by accountants to gather information for adjusting entries and preparing financial statements.

Trial Balance

A list of accounts and their balances at a given time.

Terms 2/10 N/30

Terms 2/10 N/30 is a commercial credit term indicating that a buyer can deduct 2% of the invoice amount if payment is made within 10 days; otherwise, the full invoice amount is due in 30 days.