Filippucci Company Used a Budgeted Indirect-Cost Rate for Its Manufacturing $\begin{array}{lr}\text { Work-in-Process } & \$ 10,000 \\\text { Finished Goods } & 20,000 \\\text { Cost of Goods Sold } & 170,000\end{array}$

question 172

Multiple Choice

Filippucci Company used a budgeted indirect-cost rate for its manufacturing operations, the amount allocated ($200,000) is different from the actual amount incurred ($225,000) .
Ending balances in the relevant accounts are:
$\begin{array}{lr}\text { Work-in-Process } & \$ 10,000 \\\text { Finished Goods } & 20,000 \\\text { Cost of Goods Sold } & 170,000\end{array}$
-Legal Advisory Inc.,employs 12 full-time attorneys and 10 paraprofessionals.Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours.Following is information for 2014: $\begin{array}{lcc}&\text { Budget }&\text { actual }\\\text { Indirect costs } & \$ 270,000 & \$ 300,000 \\\text { Annual salary of each attorney } & \$ 100,000 & \$ 110,000 \\\text { Annual salary of each paraprofessional } & \$ 29,000 & \$ 30,000 \\\text { Total professional labor-hours } & 50,000 \mathrm{dlh} & 60,000 \mathrm{dlh}\end{array}$ When using a normal costing system,year-end accounting records will show that indirect costs are ________.

• A) perfectly allocated
• B) underallocated
• C) within budget
• D) overallocated

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Definitions:

Pituitary

A small, pea-sized gland located at the base of the brain that produces hormones regulating growth, blood pressure, and other important functions of the body.

Sperm Production

The process by which male reproductive organs produce sperm, essential for sexual reproduction.

Prostate Gland

A gland in the male reproductive system that produces fluid that nourishes and transports sperm during ejaculation.

Homologous

Structures or organs in different organisms that are derived from a common ancestor, displaying similarity due to evolutionary origin.