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:

Sales Taxes Payable

The amount of sales tax collected from customers that has not yet been remitted to the relevant taxation authority, representing a liability.

Sales Revenue

The sum of money earned from the sales of goods or services that are fundamental to a company's main business activities.

Interest Charged

The cost incurred for borrowing money, calculated as a percentage of the total amount loaned.

Taxing Agency

An agency of the government responsible for the assessment and collection of taxes.