19. In a clothing factory, clothing items are sewn by hundreds of workers using sewing...
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19. In a clothing factory, clothing items are sewn by hundreds of workers using sewing machines and hand stitching. The sewing machines are used 80 percent of the time it takes to make the clothing items. Overhead costs relate primarily to electricity and indirect materials such as needles, bobbins, thread and thimbles. What is the most appropriate cost-allocation base for applying overhead costs to the clothing items? A) the number of sewing machines B) the number of direct labor hours C) the number of sewing machine hours D) the number of workers Answer: C Diff: 2 LO: 13-2 AACSB: Reflective thinking skills Learning Outcome: None 20. Victor Company incurred actual overhead costs of $297,500 for the year. A budgeted factory overhead rate of 150% of direct labor cost was determined at the beginning of the year. Budgeted factory overhead was $300,000 and budgeted direct labor cost was $200,000. Actual direct labor cost was $205,000 for the year. The factory overhead variance for the year was ________. A) $2,500 underapplied B) $2,500 overapplied C) $10,000 underapplied D) $10,000 overapplied
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