Determine over or under applied overhead from the facts given.
The following information was extracted from the accounting records of Bowater Company:
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Estimated manufacturing overhead
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$260,000
|
|
Estimated machine hours
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7,500
|
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Actual machine hours worked
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8,000
|
|
Actual overhead costs incurred:
|
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Indirect materials
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$97,500
|
|
Indirect labor
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$60,000
|
|
Utilities
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$10,000
|
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Insurance
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$25,000
|
|
Rent
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$70,000
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Bowater's amount of overapplied or underapplied overhead would be (round the rate to two decimal places)
a. $18,750 underapplied
b. $16,250 overapplied
c. $14,860 overapplied
d. $2,500 underapplied