Fortune Company Uses a Predetermined Overhead Rate Based on Direct

Fortune Company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs.
$\begin{array}{lrr}\text { On October } 1 \text {, the estimates for the month were: }\\ \text { Manufacturing overhead } &\$17,000\\ \text {Direct labor-hours } &13,600\\ \text {During October; the actual results were: } &\\ \text { Manufacturing overhead } &\$18,500\\ \text {Direct labor-hours } &12,000\\\end{array}$

The cost records for October will show:

A) Overapplied overhead of $1,500.
B) Underapplied overhead of $1,500.
C) Overapplied overhead of $3,500.
D) Underapplied overhead of $3,500.

Correct Answer:

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