Answer the Following Questions Using the Information Below:
Sunny Company

question 176

Essay

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:
$$\begin{array} { l r } \text { Direct materials } & \$ 280000 \\\text { Direct labour (7000 hours @ } \$ 11 / \text { hour) } & \$ 77000 \\\text { Ind irect labour } & \$ 20000 \\\text { Plant facility rent } & \$ 60000 \\\text { Deprecia tion on plant machinery and equipment } & \$ 30000 \\\text { Sales commissions } & \$ 40000 \\\text { Administrative expenses } & \$ 50000\end{array}$$
-Explain under-allocated and over-allocated indirect costs.
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Definitions:

Alcohol

An organic compound characterized by one or more hydroxyl (-OH) groups attached to a carbon atom, commonly used in beverages, medicine, and as a solvent.

Lactic Acid

A compound produced in the muscles during strenuous exercise, responsible for the feeling of muscle fatigue.

ATP

Adenosine triphosphate, a molecule that carries energy within cells for metabolism, serving as a primary energy currency of the cell.

Electron Transport Chain

a component of the electron transport system involved in cellular respiration that generates a proton gradient to produce ATP.