Nil Co Uses a Predetermined Overhead Rate Based on Direct Labour

Multiple Choice

Nil Co. uses a predetermined overhead rate based on direct Labour cost to apply manufacturing overhead to jobs. For the year ended December 31, Nil's estimated manufacturing overhead was £600,000, based on an estimated volume of 50,000 direct Labour hours, at a direct Labour rate of £6.00 per hour. Actual manufacturing overhead amounted to £620,000, with actual direct Labour cost of £325,000. For the year, manufacturing overhead was

A) overapplied by £20,000.
B) underapplied by £22,000.
C) overapplied by £30,000.
D) underapplied by £30,000.