Reyes Corporation applies overhead using an actual costing approach. Budgeted factory overhead was $266,400, budgeted machine-hours were 18,500. Actual factory overhead was $287,920, actual machine-hours were 19,050.
-How much is the over- or underapplied overhead?
A) $21,520 underapplied.
B) $13,600 underapplied.
C) $7,920 overapplied.
D) $0.

Question

Reyes Corporation applies overhead using an actual costing approach. Budgeted factory overhead was $266,400, budgeted machine-hours were 18,500. Actual factory overhead was $287,920, actual machine-hours were 19,050. 
-How much is the over- or underapplied overhead?
A) $21,520 underapplied.
B) $13,600 underapplied.
C) $7,920 overapplied.
D) $0.

Quizplus · Accepted Answer

Under actual costing, overhead is applied based on actual costs and actual activity levels, so there is no over- or underapplied overhead.

Reyes Corporation Applies Overhead Using an Actual Costing Approach