The Peterson Company uses a predetermined overhead rate of 120% of direct labor costs to apply manufacturing overhead. Estimated costs for the upcoming year are: 
If actual direct labor costs for the year were $19,000, manufacturing overhead will have been: a. Underapplied by $8,200
B) Underapplied by $3,800
C) Underapplied by $2,000
D) Underapplied by $2,200
Definitions:
Utilities Possibilities Frontier
A graphical representation showing the maximum levels of utility that two individuals or more can achieve given a fixed set of resources.
Efficient
The state of optimizing the use of limited resources to achieve the desired outcome without waste.
Equitable
Pertains to fairness or justice in the way people are treated or how resources are distributed.
Utilities Possibilities Frontier
A graphical representation showing the maximum amount of two or more goods or services that can be produced given a set of resources, highlighting the trade-offs and opportunity costs.
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