The Murphy Manufacturing Company Distributes Overhead Based on Direct Labour

Multiple Choice

The Murphy Manufacturing Company distributes overhead based on direct labour dollars. The estimated manufacturing overhead for the year was $728 000 and the estimated direct labour dollars for the year were $160 000. Indicate the amount of underapplied or overapplied overhead if actual direct labour was $148 000 and actual manufacturing overhead was $665 000.

A) $12 000 overapplied
B) $12 000 underapplied
C) $8 400 overapplied
D) $8 400 underapplied