Malcolm Company Uses a Predetermined Overhead Rate Based on Direct

question 20

Multiple Choice

Malcolm Company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The cost records for September will show:

• A)Overapplied overhead of $1,500
• B)Underapplied overhead of $1,500
• C)Overapplied overhead of $3,500
• D)Underapplied overhead of $3,500

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Definitions:

Donated Machinery

Assets received for free by an entity, where the fair market value of the machinery is recorded as both income and an asset on the balance sheet.

Volunteer Hours

The amount of time individuals spend performing unpaid services for nonprofit organizations or community projects.

Restricted Fund Method

An accounting practice where funds specified for certain purposes are kept separate in financial records to ensure their use only for those purposes.

General Fund

A primary operating fund used by governments to finance regular, day-to-day services and activities.