Small Budget Production Uses a Predetermined Overhead Rate Based Upon

Short Answer

Small Budget Production uses a predetermined overhead rate based upon direct labour hours.The firm has the following budgeted and actual data for the current year: $\begin{array} { l c } \text { Budgeted factory overhead cost } & \$ 5,000 \\ \text { Actual factory overhead cost } & \$ 6,000 \\ \text { Budgeted direct labour hours } & 1,000 \\ \text { Actual direct labour hours } & 1,100 \end{array}$
What was the amount of under-or ov er-applied overhead for the year?
a. $\$ 500$ overapplied
b. $\$ 500$ underapplied
c. $\$ 1,000$ underapplied
d. $\$ 1,000$ overapplied