Freeman Company Uses a Predetermined Overhead Rate Based on Direct

question 103

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 which of the following?

• A) Overapplied overhead of $30,000.
• B) Underapplied overhead of $30,000.
• C) Underapplied overhead of $6,000.
• D) Overapplied overhead of $6,000.

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Definitions:

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