Manufacturing overhead was estimated to be $250,000 for the year along with 20,000 direct labor hours.Actual manufacturing overhead was $225,000,and actual direct labor hours were 19,000.Which of the following would be correct?

Question

Quizplus · Accepted Answer

Manufacturing overhead is overapplied when the actual overhead costs are less than the estimated overhead costs. Here, the estimated overhead was $250,000, but the actual overhead was only $225,000, meaning $25,000 less was spent than anticipated, indicating overhead is overapplied by $25,000. However, without calculating the overhead rate and applying it to the actual hours, the exact amount of over or underapplication cannot be determined from the information given, making the closest correct choice given the options and typical understanding of the scenario as overapplied.

Manufacturing Overhead Was Estimated to Be $250,000 for the Year