Austin Company Uses a Job Order Cost Accounting System

Multiple Choice

Austin Company uses a job order cost accounting system.The company's executives estimated that direct labor would be $2,000,000 (200,000 hours at $10/hour) and that factory overhead would be $1,500,000 for the current period.At the end of the period,the records show that there had been 180,000 hours of direct labor and $1,200,000 of actual overhead costs.Using direct labor hours as the allocation base,calculate the under- or overapplied overhead for the period.

A) $150,000 overapplied.
B) $150,000 underapplied.
C) $300,000 underapplied.
D) $300,000 overapplied.
E) $200,000 underapplied.