A Manufacturing Company Applies Factory Overhead Based on Direct Labor

question 174

Multiple Choice

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual factory overhead costs incurred were $377,200, and actual direct labor hours were 36,000. What is the amount of overapplied or underapplied manufacturing overhead at the end of the year?

• A) $6,000 overapplied
• B) $6,000 underapplied
• C) $54,800 overapplied
• D) $54,800 underapplied

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Definitions:

Forced Distribution

A performance management system where employees are ranked in accordance with a pre-determined distribution curve.

Multiple Rater System

A feedback system typically used in performance assessments where several evaluators provide input on an individual's performance.

Effective Appraisal

The process of evaluating an employee's job performance in a constructive manner, aiming to encourage professional growth and improve future performance.

Performance Evaluation

The systematic assessment of an employee's job performance, strengths, and areas for improvement, typically conducted on a regular basis by their supervisor.