A Manufacturing Company Applies Overhead Based on Direct Labor Hours

question 58

Multiple Choice

A manufacturing company applies overhead based on direct labor hours. At the beginning of the year, it estimated that overhead costs would be $720,000 and direct labor hours would be 90,000. Actual overhead costs incurred were $754,400, and actual direct labor hours were 92,000. What is the amount of overapplied or underapplied overhead at the end of the year?

• A) $34,400 overapplied
• B) $18,400 overapplied
• C) $34,400 underapplied
• D) $18,400 underapplied

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Definitions:

Times Interest Earned

A ratio that measures a company's ability to meet its interest payments on outstanding debt.