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.The cost records for October will show: $$\begin{array} { | l | c | } \hline \text { On October 1, the estimates for the month were: } & \\\hline \text { Manufacturing overhead } & \$ 17,000 \\\hline \text { Direct labor-hours } & 13,600 \\\hline \text { During october, the actual results were: } & \\\hline \text { Manufacturing overhead } & \$ 18,500 \\\hline \text { Direct labor-hours } & 12,000 \\\hline\end{array}$$

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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