Derbyshire Ltd Distributes Overhead Based on Direct Labour Dollars

Multiple Choice

Derbyshire Ltd distributes overhead based on direct labour dollars. The estimated manufacturing overhead for the year was $800 000 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 $135 000 and actual manufacturing overhead was $658 000.

A) $17 000 underapplied
B) $17 000 overapplied
C) $25 000 overapplied
D) $25 000 underapplied