If the company bases its predetermined overhead rate on capacity, by how much was manufacturing overhead underapplied or overapplied?
A)$87,232 Underapplied
B)$87,232 Overapplied
C)$27,648 Overapplied
D)$27,648 Underapplied

Question

Quizplus · Accepted Answer

The predetermined overhead rate based on capacity often results in underapplied overhead because it allocates more overhead than is actually incurred, due to unused capacity.

If the Company Bases Its Predetermined Overhead Rate on Capacity