The following information is available from the Terry Company:
The total under or over applied overhead for the period is:
A)$800 overapplied.
B)$800 underapplied.
C)$2,600 underapplied.
D)$3,000 overapplied.
E)$3,000 underapplied.

Question

The following information is available from the Terry Company: 
The total under or over applied overhead for the period is:
A)$800 overapplied. 
B)$800 underapplied. 
C)$2,600 underapplied. 
D)$3,000 overapplied. 
E)$3,000 underapplied.

Quizplus · Accepted Answer

The given information, "11ea6e70_bd3b_8b29_8f54_65422e721de4_TB1699_00," refers to a job cost sheet or some other record of overhead costs. Without any further information or context, we cannot calculate the total amount of overhead cost or the amount of overhead that should have been applied to the company's products. However, we are told that there is either over-applied or under-applied overhead for the period. Since the options only include under-applied or over-applied amounts, we can eliminate choices A, B, and D. We are left with choices C and E. We cannot determine which of these is the correct answer without additional information about the company's overhead costs and actual production levels. However, based on the information given, we would choose E, $3,000 underapplied, since this is the larger of the two possible amounts of under-applied overhead.

The Following Information Is Available from the Terry Company