The Following Information Was Taken from the Cost Records of the Krameer

question 61

Multiple Choice

The following information was taken from the cost records of the Krameer Company: $\begin{array}{rr} \text { Estimated overhead } & \$ 180,000 \\\text { Actual overhead } & \$ 178,000 \\\text { Estimated direct labor hours } & 24,000 \\\text { Actual direct labor hours } & 25,000 \\\end{array}$ If overhead is applied based on direct labor hours, the company's overapplied or underapplied overhead was

• A) $2,000 overapplied.
• B) $2,000 underapplied.
• C) $9,500 overapplied.
• D) $9,500 underapplied.

---

Definitions:

Activity-Based Costing

A method of allocating costs to products and services based on the activities they require.

Activity Cost Pools

Groups of costs categorized based on the activities that incur the cost, used in activity-based costing.

Machine-Hours

A measure used in accounting to allocate manufacturing overhead costs to each unit of production, representing the number of hours a machine is operated.

Batches

Quantities of goods or materials processed or produced at one time during manufacturing.