Cost Accounting Quiz: Under Overapplied Overhead
2 questions · exam conditions
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Under Overapplied OverheadQuestion 1 of 2

Delta Manufacturing applies overhead at 200% of direct labor cost. During the year, actual overhead was $460,000 and applied overhead totaled $440,000. The company prorates under/overapplied overhead among accounts based on their applied overhead content. If after proration, the Cost of Goods Sold account increases by $14,000, what percentage of total applied overhead was originally in the Cost of Goods Sold account?

70%
75%
65%
80%
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Cost Accounting Quiz

Cost Accounting Quiz: Under Overapplied Overhead

Practice Under Overapplied Overhead in Cost Accounting with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Under Overapplied Overhead, giving you a quick way to practice the rules, question types, and explanations that matter most for Cost Accounting.

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Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

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Question 1

Delta Manufacturing applies overhead at 200% of direct labor cost. During the year, actual overhead was $460,000 and applied overhead totaled $440,000. The company prorates under/overapplied overhead among accounts based on their applied overhead content. If after proration, the Cost of Goods Sold account increases by $14,000, what percentage of total applied overhead was originally in the Cost of Goods Sold account?

  1. 70% (correct answer)
  2. 75%
  3. 65%
  4. 80%
Explanation: Underapplied overhead = $460,000 - $440,000 = $20,000. If COGS increased by $14,000 due to proration, then COGS contained $14,000 ÷ $20,000 = 70% of the total applied overhead. Therefore, COGS originally contained 70% of the $440,000 applied overhead.

Question 2

Galaxy Industries applies overhead at $15 per direct labor hour. During the year, 18,000 direct labor hours were worked, and actual overhead costs were $280,000. The company initially closed the entire under/overapplied overhead to Cost of Goods Sold, increasing it from $450,000 to $465,000. Later, the company decided to prorate the adjustment among Work-in-Process (20%), Finished Goods (25%), and Cost of Goods Sold (55%). What will be the final Cost of Goods Sold balance after the proration adjustment?

  1. $458,250 (correct answer)
  2. $456,750
  3. $461,750
  4. $453,250
Explanation: Applied overhead = 18,000 × $15 = $270,000. Since COGS increased from $450,000 to $465,000, the underapplied overhead was $15,000 (which equals $280,000 - $270,000 + $5,000 adjustment needed). Under proration, only 55% of the $15,000 stays with COGS: $15,000 × 55% = $8,250. Final COGS = $450,000 + $8,250 = $458,250.