Manufacturing overhead applied on the basis of direct labor-hours was $120,000, while actual manufacturing overhead incurred was $124,000 for the month of April. Which of the following is always true given the statement above?
A) Overhead was overapplied by $4,000.
B) Overhead was underapplied by $4,000.
C) Actual direct labor-hours exceeded budgeted direct labor-hours.
D) Actual direct labor-hours were less than budgeted direct labor-hours.

Question

Quizplus · Accepted Answer

The overhead was underapplied by $4,000 because the actual manufacturing overhead incurred ($124,000) was greater than the overhead applied ($120,000).

Manufacturing Overhead Applied on the Basis of Direct Labor-Hours Was