A job order cost system uses a predetermined overhead rate based on estimated activity

Offered Price: $ 14.00 Posted on: 03/20/2014 02:21 AM Due on: 03/20/2014
Question # 00010570 Subject Accounting Topic Accounting Tutorials: 1
Question Purchase it

A job order cost system uses a predetermined overhead rate based on estimated activity and estimated manufacturing overhead cost. At the end of the year, underapplied overhead might be explained by which of the following situations?
A)
B)
C)
D)

Actual activity
Actual manufacturing overhead costs
Greater than estimated
Greater than estimated
Greater than estimated
Less than estimated
Less than estimated
Greater than estimated
Less than estimated
Less than estimated

The correct answer is C.
How to solve this kind of problem?
And I am confused why A is wrong. Suppose the estimated cost is 100, and estimated labor hour is 50, so the predetermined overhead rate is 2. In choice A, the actual activity is greater than estimated (suppose it is 60), and the actual overhead costs are grater than estimated (suppose it is 150). Because the predetermined overhead rate is 2, so overhead applied is 120. 120 is less than 150, so isn’t A correct? I am very confused.
Tutorials for this Question
  1. A job order cost system uses a predetermined overhead rate based on estimated activity

    Available for: $ 14.00 Posted on: 03/20/2014 02:22 AM
    Tutorial # 00010153 Puchased By: 0
    Tutorial Preview
    xn xxxxxxxxxxx xndxr xxxxxxxxxxx xr xvxr xxxxxxxxxxx xf xvxrhxxds xx cxmpxrx xxx xxxxxx xvxrhxxd xx thx stxndxrd xxxxxxxx whxch xs xxxx x x xxxxxxx Nxw xxxxxxxx cxst xs xxxx stxndxrd cxst xx $100 xxx xxxxxx cxst xx $165 xn xxxx cxsx xctxxl xxxx xs xxxxxx xxxx thx xxxxxxxx cxst bxt xxxxx thxn thx xxxxxxxx cxst xxx xxx xctxxl xxxxxxxx xs lxss xxxx bxdgxtxd xctxvxty xxx mxrx xxxx xxxxxxxx xctxvxty xxxxxxxxxxxxxxx bxth…
Loading...