Company, Inc

question 167

Multiple Choice

Company, Inc. applies overhead on the basis of direct labour hours. At the beginning of the year, Company, Inc. estimates overhead to be $540,000, machine hours to be 150,000, and direct labour hours to be 90,000. During January, Company, Inc. has 8,000 direct labour hours and 12,000 machine hours.
-Refer to the Figure.Suppose the actual overhead for January is $51,000.What is the overhead variance?

• A)$800 overapplied
• B)$800 underapplied
• C)$3,000 overapplied
• D)$3,000 underapplied

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Definitions:

Cartel

An association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition.

Peanut Growers

Individuals or entities engaged in the cultivation and harvest of peanuts as an agricultural practice.

Marginal Revenue

It refers to the additional income earned by selling one more unit of a good or service.

Marginal Cost

The increase in costs resulting from the manufacturing of one extra good or service.