The Management of Griswell Corporation Would Like to Investigate the Possibility

question 23

Multiple Choice

The management of Griswell Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity.The company's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 39,000 machine-hours.In addition,capacity is 45,000 machine-hours and the actual level of activity for the year is 40,200 machine-hours.All of the manufacturing overhead is fixed and is $702,000 per year.For simplicity,it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity.It is further assumed that this is also the actual amount of manufacturing overhead for the year.If the company bases its predetermined overhead rate on capacity,by how much was manufacturing overhead underapplied or overapplied?

• A)$74,880 Overapplied
• B)$21,600 Overapplied
• C)$21,600 Underapplied
• D)$74,880 Underapplied

---

Definitions:

Valentine's Day

An annual holiday celebrated on February 14th, known for expressing love and affection between intimate companions.

Product Item

A specific version or variation of a product that is distinct in its identifiable characteristics like size, flavor, or color.

Unique Brand

A brand that distinctively sets itself apart from competitors through its identity, values, and offerings.

Closely Related

Items, concepts, or entities that have a direct or strong connection to each other, often affecting each other's behavior or characteristics.