Derbyshire Ltd Distributes Overhead Based on Direct Labour Dollars

question 10

Multiple Choice

Derbyshire Ltd distributes overhead based on direct labour dollars. The estimated manufacturing overhead for the year was $800 000 and the estimated direct labour dollars for the year were $160 000. Indicate the amount of underapplied or overapplied overhead if actual direct labour was $135 000 and actual manufacturing overhead was $658 000.

• A) $17 000 underapplied
• B) $17 000 overapplied
• C) $25 000 overapplied
• D) $25 000 underapplied

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Definitions:

Erie Canal

A historic canal in New York, completed in 1825, which played a critical role in the commercial expansion of the United States.

Lake Erie

One of the five Great Lakes in North America, bordered by Ontario, Canada, and several U.S. states, known for its fisheries, recreation, and historical significance in trade and transportation.

Hudson River

A major river in New York State that flows from the Adirondack Mountains down to New York City, historically significant for trade and transportation.

Market Economy

An economic system where supply and demand from consumers drive the production and pricing of goods and services.