Harrell Company Uses a Predetermined Overhead Rate Based on Direct

question 153

Multiple Choice

Harrell 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 its total manufacturing overhead cost at $400,000 and its direct labor-hours at 100,000 hours. The actual overhead cost incurred during the year was $350,000 and the actual direct labor-hours incurred on jobs during the year was 90,000 hours. The manufacturing overhead for the year would be:

• A) $10,000 underapplied
• B) $10,000 overapplied
• C) $50,000 underapplied
• D) $50,000 overapplied