The Management of Foy Corporation Would Like to Investigate the Possibility

question 12

Multiple Choice

The management of Foy 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 86,000 machine-hours. In addition, capacity is 94,000 machine-hours and the actual level of activity for the year is 88,200 machine-hours. All of the manufacturing overhead is fixed and is $6,790,560 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)$173,712 Underapplied
• B)$418,992 Underapplied
• C)$418,992 Overapplied
• D)$173,712 Overapplied

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Definitions:

Stereotypes

Oversimplified and widely held beliefs about the characteristics of particular groups of people.

Cultural Norms

Shared expectations and rules that guide behavior of people within social groups, often considered the standard of acceptable behavior in society.

Hegemonic Masculinity

A concept in gender studies referring to the dominant position of men and the idealized standards of masculinity in a given society.

Aggressiveness

The quality of being ready or likely to attack or confront; characterized by or resulting from aggression.