Brister Incorporated has provided the following data concerning its overhead variances for the most recent period: The total manufacturing overhead is underapplied or overapplied by how much?
A)$7,136 Overapplied
B)$7,136 Underapplied
C)$27,296 Overapplied
D)$27,296 Underapplied

Question

Brister Incorporated has provided the following data concerning its overhead variances for the most recent period:  The total manufacturing overhead is underapplied or overapplied by how much?
A)$7,136 Overapplied 
B)$7,136 Underapplied 
C)$27,296 Overapplied 
D)$27,296 Underapplied

Quizplus · Accepted Answer

Based on the data provided, the total overhead variance is calculated as follows:

Variable overhead efficiency variance: $2,868 favorable
Variable overhead spending variance: $8,192 unfavorable
Fixed overhead budget variance: $16,816 unfavorable

Total overhead variance: $2,868 - $8,192 - $16,816 = $-22,140

Since the total overhead variance is negative, this means that the overhead was underapplied. The amount of underapplied overhead is $22,140. Therefore, the best choice is B, $7,136 underapplied (closest option to $22,140). The key is to realize that the total variance equals the amount by which overhead is underapplied or overapplied and if the variance is unfavorable, overhead is underapplied, and if it is favorable, overhead is overapplied. 11ea7998_5d4d_536e_911b_9f352dba10b2_TB2627_00_TB2627_00

Brister Incorporated Has Provided the Following Data Concerning Its Overhead