Answer the Following Questions Using the Information Below:
Sunny Company

question 284

Multiple Choice

Answer the following questions using the information below:
Sunny Company makes gas pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labour-hour.The following data are obtained from the accounting records for June 2018:
$$\begin{array} { l r } \text { Direct materials } & \$ 280000 \\\text { Direct labour (7000 hours @ } \$ 11 / \text { hour) } & \$ 77000 \\\text { Ind irect labour } & \$ 20000 \\\text { Plant facility rent } & \$ 60000 \\\text { Deprecia tion on plant machinery and equipment } & \$ 30000 \\\text { Sales commissions } & \$ 40000 \\\text { Administrative expenses } & \$ 50000\end{array}$$
-For June 2018,manufacturing overhead was:

• A)overallocated.
• B)underallocated.
• C)neither overallocated nor underallocated.
• D)indeterminable.

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Definitions:

Potentially Efficient

Describes a situation where resources could be allocated in a way that maximizes productivity or utility, but are not currently.

Worse Off

A situation in which an individual, group, or economy is in a poorer or less advantageous position compared to a previous state or another entity.

Equitable

Characterized by fairness and impartiality; ensuring just treatment or distribution of resources without favoritism or discrimination.

Externalities

Economic side effects or by-products that affect an uninvolved third party; can be either positive or negative.