Igor IncHad a Predetermined Overhead Rate of $2 Per Direct Labor

question 35

Multiple Choice

Igor Inc.had a predetermined overhead rate of $2 per direct labor hour.The direct labor hours were estimated to be 25,000.The actual manufacturing overhead incurred was $47,000 and 24,000 actual direct labor hours were worked.How much was overhead over/under applied last year?

• A) $1,000 underapplied
• B) $2,000 underapplied
• C) $1,000 overapplied
• D) $3,000 overapplied

---

Definitions:

Process Capability Analysis

A statistical technique used to determine if a manufacturing or business process is capable of meeting its design specifications and quality demands.

Common Causes

Factors that consistently contribute to a process's variation under normal conditions, as opposed to special causes that are sporadic.

Control Limits

Statistical boundaries in process control systems that indicate the maximum and minimum values a process should operate within to maintain quality control.

P-chart

A P-chart is a type of control chart used in statistical quality control to monitor the proportion of defective items in a series of samples and determine whether a process is in control.