Berkshire Ltd Distributes Overhead Based on Direct Labour Dollars

Multiple Choice

Berkshire Ltd distributes overhead based on direct labour dollars. The estimated manufacturing overhead for the year was $520 000 and the estimated direct labour dollars for the year were $130 000. Indicate the amount of underapplied or overapplied overhead if actual direct labour was $118 000 and actual manufacturing overhead was $497 400.

A) $25 400 underapplied
B) $25 400 overapplied
C) $22 600 overapplied
D) $22 600 underapplied