The Following Budget Data Are Available for Sharp Company

question 150

Multiple Choice

The following budget data are available for Sharp Company: If factory overhead is applied based on direct labor hours, the amount of overhead to be applied is

• A)$180,000
• B)$181,000
• C)$172,500
• D)$184,000

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Definitions:

Overapplied

A scenario in which the overhead cost assigned to manufacturing exceeds the overhead that was actually incurred.

Direct Labor-Hours

A measure of the labor directly involved in manufacturing a product, represented in hours.

Predetermined Overhead Rate

A rate calculated before a period begins, based on estimated overhead costs and activity levels, used to allocate overhead to products.

Actual Manufacturing Overhead

The real costs incurred in the manufacturing process that are not directly tied to production, including utilities, maintenance, and factory rent.