Clear Colors Company Uses a Predetermined Overhead Rate Based on Direct

Clear Colors Company uses a predetermined overhead rate based on direct labor costs to apply manufacturing overhead to jobs.At the beginning of the year the company estimated its total manufacturing overhead cost at $350, 000 and its direct labor costs at $200, 000.The actual overhead cost incurred during the year was $362, 000 and the actual direct labor costs incurred on jobs during the year was $208, 000.The manufacturing overhead for the year would be:

A) $12, 000 underapplied.
B) $12, 000 overapplied.
C) $2, 000 underapplied.
D) $2, 000 overapplieD.Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $350, 000 ÷ $200, 000 = 1.75

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