Snappy Company Has a Job-Order Costing System and Uses a Predetermined

question 29

Multiple Choice

Snappy Company has a job-order costing system and uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Manufacturing overhead cost and direct labor hours were estimated at $100,000 and 40,000 hours, respectively, for the year. In July, Job #334 was completed at a cost of $5,000 in direct materials and $2,400 in direct labor. The labor rate is $6 per hour. By the end of the year, Snappy had worked a total of 45,000 direct labor-hours and had incurred $110,250 actual manufacturing overhead cost.
-Snappy's manufacturing overhead for the year was:

• A)$10,250 underapplied
• B)$12,500 overapplied
• C)$12,500 underapplied
• D)$2,250 overapplied

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Definitions:

Acquisition

The process of obtaining control of another corporation or asset.

Divest

To sell off assets, investments, or divisions of a company, often for financial, ethical, or strategic objectives.

Newly Merged Firm

A company that has recently completed a merger, combining assets, liabilities, and operations with another firm.

Raise Cash

The process by which a company or individual generates liquidity, often through the sale of assets or equity.