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Overhead underapplied or overapplied

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The company I work for uses direct labor hours as the base to allocate manufacturing overhead. Fox made the following estimates for the coming year: manufacturing overhead cost, $60,000; direct labor hours: 6,000.
If the actual result for the year are: manufacturing overhead cost, $65,000; direct labor hours: 7,000,

Will overhead be underapplied or overapplied, and by how much?

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Solution Summary

The solution explains how to calculate the applied overhead and whether it is under or over applied.

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We first find the predetermined overhead rate. The predetermined ...

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