Forbes Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs.At the beginning of the period, the Corporation estimated manufacturing overhead would be $18,000 and direct labor-hours would be 15,000.The actual figures were $19,500 for manufacturing overhead and 16,000 direct labor-hours.The cost records for the period will show:

A) overapplied manufacturing overhead of $300
B) overapplied manufacturing overhead of $1,500
C) underapplied manufacturing overhead of $1,500
D) underapplied manufacturing overhead of $300

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Pablo Vargas · Accepted Answer

Final Answer : D, Explanation :  Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $18,000 ÷ 15,000 direct labor-hours = $1.20 per direct labor-hourOverhead over or underapplied

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