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    Dexter Company's Manufacturing Overhead Cost

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    Dexter Company uses a standard cost system and applies manufacturing overhead cost to units of product on the basis of standard direct labor-hours (DLHs). Information on Dexter Company's manufacturing overhead costs for last period is given below:

    Actual hours worked 40,000 DLHs
    Standard hours allowed for actual production 38,000 DLHs
    Denominator hours used in computing the predetermined overhead rate 35,000 DLHs
    Predetermined overhead rate 4 per DLH
    Actual overhead costs incurred 150,000

    Given these data, the under- or overapplied overhead cost for the period would be:

    8,000 underapplied
    10,000 underapplied
    10,000 overapplied
    2,000 overapplied

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