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Lopar Company uses a predetermined overhead rate based on direct labor dollars. Lopar Company estimated that its 20x9 overhead would total $938,000 and that 20x9 direct labor costs would be $670,000. During 20x9, actual overhead costs were $960,000, and actual direct labor costs were $700,000. By how much was Lopar's overhead over- or underapplied? a. $20,000 underapplied b. $10,000 underapplied c. $20,000 overapplied d. $18,000 overapplied

Lopar Company uses a predetermined overhead rate based on direct labor dollars. Lopar Company estimated that its 20x9 overhead would total $938,000 and that 20x9 direct labor costs would be $670,000. During 20x9, actual overhead costs were $960,000, and actual direct labor costs were $700,000. By how much was Lopar's overhead over- or underapplied? a. $20,000 underapplied b. $10,000 underapplied c. $20,000 overapplied d. $18,000 overapplied

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Lopar Company uses a predetermined overhead rate based on direct labor dollars. Lopar Company estimated that its 20x9 overhead would total $938,000 and that 20x9 direct labor costs would be $670,000. During 20x9, actual overhead costs were $960,000, and actual direct labor costs were $700,000. By how much was Lopar's overhead over- or underapplied? a. $20,000 underapplied b. $10,000 underapplied c. $20,000 overapplied d. $18,000 overapplied
Transcribed Image Text:Lopar Company uses a predetermined overhead rate based on direct labor dollars. Lopar Company estimated that its 20x9 overhead would total $938,000 and that 20x9 direct labor costs would be $670,000. During 20x9, actual overhead costs were $960,000, and actual direct labor costs were $700,000. By how much was Lopar's overhead over- or underapplied? a. $20,000 underapplied b. $10,000 underapplied c. $20,000 overapplied d. $18,000 overapplied
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