How much is the amount of over- or underapplied overhead?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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During 2019, Sheridan Company expected Job no. 59 to cost $200000 of overhead, $500000 of materials, and $100000 in labor. Sheridan applied overhead based on direct labor cost. Actual production required an overhead cost of $195000, $660000 in materials used, and $310000 in labor. All of the goods were completed. How much is the amount of over- or underapplied overhead?

$5000 overapplied
$5000 underapplied
$425000 overapplied
$425000 underapplied
Expert Solution
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Overheads:- Overheads are the costs like labor, raw material etc that are incurred by the companies during its production of goods or while providing the services. These overheads are included in the selling price including profit. 

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