Q1) Following information was extracted from accounting records of Bowater Company:
| Estimated manufacturing overhead |
$260,000 |
| Estimated machine hours |
7,500 |
| Actual machine hours worked |
8,000 |
| Actual overhead costs incurred: |
| Indirect materials |
$97,500 |
| Indirect labor |
$60,000 |
| Utilities |
$10,000 |
| Insurance |
$25,000 |
| Rent |
$70,000 |
Bowater's amount of overapplied or underapplied overhead would be:
a. $18,750 underapplied
b. $16,250 overapplied
c. $14,860 overapplied
d. $2,500 underapplied