Morris Company Applies Overhead Based on Direct Labor Costs

question 107

Multiple Choice

Morris Company applies overhead based on direct labor costs. For the current year, Morris Company estimated total overhead costs to be $400,000, and direct labor costs to be $2,000,000. Actual overhead costs for the year totaled $380,000, and actual direct labor costs totaled $1,800,000.
- At year-end, Factory Overhead is:

• A) Underapplied by $20,000.
• B) Overapplied by $40,000.
• C) Overapplied by $20,000.
• D) Overapplied by $190,000.
• E) Neither overapplied nor underapplied.

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Definitions:

Pleasant Stimulus

A pleasant stimulus is any event, object, or situation that produces a positive emotional response or feeling of enjoyment.

Withdrawal

Symptoms that occur after cessation or reduction in intake of a substance that the body has become dependent upon, like drugs or alcohol.

Cognitive Processes

Mental activities involved in acquiring, processing, storing, and applying information, such as perception, memory, and reasoning.

Secondary Reinforcers

Stimuli that have no inherent value but become reinforcing through their association with primary reinforcers.