Freeman Company Uses a Predetermined Overhead Rate Based on Direct

question 98

Multiple Choice

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

• 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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