Wilson Enterprises Applies Overhead Based on Direct Labor Cost

question 68

Multiple Choice

Wilson Enterprises applies overhead based on direct labor cost.The company estimates that their overhead for the year will be $240,000,and direct labor cost to be $300,000.Actual direct labor cost for Martinez Manufacturing was $280,000 and actual overhead costs were $220,000.At the end of the year,manufacturing overhead was:

• A) Overapplied by $20,000.
• B) Underapplied by $20,000.
• C) Overapplied by $4,000.
• D) Underapplied by $4,000.

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Definitions:

Purchases

Transactions involving the acquisition of goods or services in exchange for payment, contributing to a business's inventory or operational needs.

Trial Balance

A financial worksheet that gathers the balances from all accounts into columns of debits and credits, verifying the mathematical accuracy of a company's accounting records.

Ledger

Definition: A book or database in which financial transactions are summarized and categorized to show account balances.

Fees Billed

Represents charges issued by a company for services it has provided, awaiting payment from clients or customers.