Sullivan Company Uses a Predetermined Overhead Rate Based on Direct

question 106

Multiple Choice

Sullivan Company uses a predetermined overhead rate based on direct labor hours to allocate manufacturing overhead to jobs.The company estimated that it would incur $500,000 of manufacturing overhead during the year and that 100,000 direct labor hours would be worked.During the year,the company actually incurred manufacturing overhead costs of $590,000 and 120,000 direct labor hours were worked. By how much was manufacturing overhead overallocated or underallocated for the year?

• A)$10,000 underallocated
• B)$10,000 overallocated
• C)$90,000 underallocated
• D)$90,000 overallocated

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Definitions:

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