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:

William Perry

A developmental psychologist known for his theory on cognitive development in college students, focusing on the evolution of their ethical and intellectual values.

Relativistic

Relating to the theory which states that space and time are relative and all motion is relative to a reference frame, rather than being absolute.

Dualistic

Pertaining to or involving a dichotomy or contrast between two concepts or entities.

Stereotypes

Oversimplified and widely held fixed images or ideas of particular types of people or things, which often lead to prejudices and unfair judgments.