The Cavy Company Estimates That the Factory Overhead for the Following

question 1

Multiple Choice

The Cavy Company estimates that the factory overhead for the following year will be $1,250,000.The company has decided that the basis for applying factory overhead should be machine hours,which is estimated to be 40,000 hours.The machine hours for the month of April for all of the jobs were 4,780.If the actual factory overhead totaled $141,800,determine the over- or underapplied amount for the month.

• A) $7,575 underapplied
• B) $35,220 underapplied
• C) $7,575 overapplied
• D) $35,220 overapplied

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Definitions:

Divestiture

The process of selling an asset, investment, or division of a company as a strategic move for growth or downsizing.

Wholly Owned Subsidiary

A company whose entire stock is held by another company, making it 100% owned by the parent company.

Targeted Share Repurchase

A strategy used by companies to buy back shares specifically from certain shareholders, often to avoid a takeover threat.

Supermajority

A requirement for a high percentage of votes, typically greater than a simple majority, to approve a proposal or motion.