Freeman Company Uses a Predetermined Overhead Rate Based on Direct

Multiple Choice

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

A) underapplied overhead of $6,000.
B) overapplied overhead of $6,000.
C) underapplied overhead of $30,000.
D) overapplied overhead of $30,000.