If the company bases its predetermined overhead rate on capacity, by how much was manufacturing overhead underapplied or overapplied?
A)$35,802 Underapplied
B)$7,722 Underapplied
C)$35,802 Overapplied
D)$7,722 Overapplied

Question

Quizplus · Accepted Answer

Manufacturing overhead is underapplied by $35,802. This is because the company's predetermined overhead rate is based on capacity, and the actual overhead incurred was greater than the amount that was applied to production.

If the Company Bases Its Predetermined Overhead Rate on Capacity