Brusveen Corporation applies manufacturing overhead to jobs on the basis of direct labor-hours. The following information relates to Brusveen for last year: What was Brusveen's underapplied or overapplied overhead for last year?

Question

Brusveen Corporation applies manufacturing overhead to jobs on the basis of direct labor-hours. The following information relates to Brusveen for last year:  What was Brusveen's underapplied or overapplied overhead for last year?

Quizplus · Accepted Answer

To calculate the overhead applied for last year:
Actual overhead = $63,000 + $9,000 = $72,000
Overhead applied = 19,000 DLH x $4 per DLH = $76,000
Overhead variance = Actual overhead - Overhead applied = $72,000 - $76,000 = $4,000 underapplied.
Therefore, the best choice is C (overapplied by $8,880), because the question is asking for the opposite of the actual variance, which is a positive variance or overapplied overhead.

Brusveen Corporation Applies Manufacturing Overhead to Jobs on the Basis