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

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Definitions:

Bonus

Additional compensation given to employees as a reward for their performance or for special occasions.

FICA Taxes

Taxes imposed by the Federal Insurance Contributions Act, which fund Social Security and Medicare services.

Union Dues

Fees paid by workers to a union for membership and representation.