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Question(s) / Instruction(s):

A company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, estimated manufacturing overhead cost was $300,000 based on an estimated activity level of 100,000 direct labor-hours. Actual overhead amounted to $325,000 with actual direct labor-hours totaling 110,000 for the year. How much was the overapplied or underapplied overhead?

 a)           $25,000 overapplied

 b)           $25,000 underapplied

 c)           $5,000 Overapplied

 d)           $5,000 underapplied

 

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