The Coconut Creek overhead account shows $208,600 applied to jobs and $220,900 actual overhead incurred. What overhead status should be reported?
Correct Answer
C) $12,300 underapplied
Compare actual overhead with overhead applied to jobs; actual greater than applied is underapplied, and applied greater than actual is overapplied.
Why This Is the Correct Answer
Compare actual overhead with overhead applied to jobs; actual greater than applied is underapplied, and applied greater than actual is overapplied.
Why the Other Options Are Wrong
Option A: $12,300 overapplied
$12,300 overapplied is not aligned with the supported result for under/overapplied overhead; it has the wrong label or classification even if the number looks close.
Option B: $208,600
$208,600 is above the supported result for under/overapplied overhead; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $220,900
$220,900 is above the supported result for under/overapplied overhead; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Compare and actual live in different drawers; Controller Closes tells which opens.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section Three, Job Cost Accounting, Overhead Application; use the job ledger figures in the stem and recompute the same accounting measure.
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