ACCT 323 Winter 2019 Practice Midterm

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Q38) Under Expense for low-activity, why was $2,000(July) used instead of $1,750(June) ?

Q42) Shouldn’t it be underapplied instead of overapplied?

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Hi Christopher,

Great questions! For 38 it is important that you always consider the highest and lowest activity levels not the costs. Even though June is the lowest cost at 1750, its activity of 20 is higher than July which is 10. You always use the lowest, hence why July is used rather than June!

For q42, your actual is the left side of the T-account, not the right side. Using your POHR and the actual machine hours gets you your applied overhead. Since the right side is larger than the actual overhead you incurred, you over-applied your overhead.

Hope this clears things up!

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