Carlo Company uses a predetermined overhead rate based on direct labour hours to appl? manufacturing overhead to jobs. The company estimated manufacturing overhead at
$255,000 for the year and direct labour-hours at 100,000 hours. Actual manufacturing overhead costs incurred during the year totalled $270,000. Actual direct labour hours were 105,000. What was the overapplied or underapplied overhead for the year?
A)$2,250 underapplied.
B)$15,000 underapplied.
C)$2,250 overapplied.
D)$15,000 overapplied.

Question

Quizplus · Accepted Answer

The predetermined overhead rate is $255,000 / 100,000 hours = $2.55 per hour. Applied overhead is $2.55 * 105,000 hours = $267,750. Actual overhead is $270,000. The difference is $270,000 - $267,750 = $2,250 underapplied.

Carlo Company Uses a Predetermined Overhead Rate Based on Direct