Freeman Company Uses a Predetermined Overhead Rate Based on Direct

question 18

Multiple Choice

Freeman Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $150,000 and direct labour hours would be 10,000. The actual figures for the year were $186,000 for manufacturing overhead and
12,000 direct labour hours. The cost records for the year will show:

• A)underapplied overhead of $6,000.
• B)overapplied overhead of $6,000.
• C)underapplied overhead of $30,000.
• D)overapplied overhead of $30,000.

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