Beta Company Uses a Predetermined Overhead Rate Based on Direct

Multiple Choice

Beta Company uses a predetermined overhead rate based on direct labour hours to allocate manufacturing overhead to jobs. The company estimated that it would incur $600,000 of manufacturing overhead during the year and that 150,000 direct labour hours would be worked. During the year, the company actually incurred manufacturing overhead costs of $582,000 and 135,000 direct labour hours were worked. By how much was manufacturing overhead overallocated or underallocated for the year?

A) $18,000 underallocated
B) $42,000 overallocated
C) $42,000 underallocated
D) $18,000 overallocated