Sullivan Company Uses a Predetermined Overhead Rate Based on Machine

question 23

Multiple Choice

Sullivan Company uses a predetermined overhead rate based on machine hours to allocate manufacturing overhead to jobs. The company estimated that it would incur $500,000 of manufacturing overhead during the year and that 200,000 machine hours would be used. During the year, the company actually incurred manufacturing overhead costs of $590,000 and 220,000 machine hours were used.

By how much was manufacturing overhead overallocated or underallocated for the year?

• A) $40,000 underallocated
• B) $40,000 overallocated
• C) $90,000 underallocated
• D) $90,000 overallocated

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Definitions:

Mitochondrion

A double-membraned organelle found in most eukaryotic cells, central to the production of ATP (energy) through the process of cellular respiration.

Powerhouse

Colloquially refers to mitochondria, organelles in cells that produce energy through respiration and regulate cellular metabolism.

Ribosomes

Cellular structures responsible for protein synthesis, translating mRNA into amino acid sequences.

Synthesize Proteins

The process by which cells construct proteins from amino acids based on genetic information.