The Overhead Budget, Based on a Budgeted Volume of 100

question 55

Multiple Choice

The overhead budget, based on a budgeted volume of 100 000 direct labour hours, was $325 000. Actual overhead costs amounted to $340 000 and actual direct labour hours were 106 000. By how much was overhead under or overapplied?

• A) $4 500 overapplied
• B) $4 500 underapplied
• C) $15 000 overapplied
• D) $15 000 underapplied

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Definitions:

Self-Dealing Managers

Managers or directors of a company who engage in transactions that benefit themselves at the expense or detriment of the company or its shareholders.

Business Judgment Rule

A legal doctrine that protects corporate executives' decisions when made in good faith and believed to be in the best interest of the company.

Corporate Opportunity

A legal doctrine that restricts leaders of a corporation from taking personal advantage of an opportunity that should belong to the corporation.

Safe Harbor

A provision in a law or regulation that provides protection from liability or penalty under specific situations or conditions.