Sullivan Company Uses a Predetermined Overhead Rate Based on Direct

question 145

Multiple Choice

Sullivan Company uses a predetermined overhead rate based on direct labour hours to allocate manufacturing overhead to jobs. The company estimated that it would incur $500,000 of manufacturing overhead during the year and that 100,000 direct labour hours would be worked. During the year, the company actually incurred manufacturing overhead costs of $590,000 and 120,000 direct labour hours were worked.

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

• A) $10,000 underallocated
• B) $10,000 overallocated
• C) $90,000 underallocated
• D) $90,000 overallocated

---

Definitions:

Skills

Skills are the learned abilities to carry out tasks or actions with determined results often within a given amount of time, energy, or both.

Motivation

The method that starts, directs, and sustains actions aimed at achieving objectives.

Rehearsal

A cognitive process involving the repetitive review of information to be remembered, enhancing memory retention.

Unorganized Information

Data or facts that are not systematically arranged, making it difficult to process, understand, or utilize efficiently.