Jensen Fly Fishing Shop applies overhead at a rate of $5 per direct labor hour.At the end of the month,the company had accumulated 7,000 direct labor hours and incurred $38,000 in manufacturing overhead.Manufacturing overhead was

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The applied overhead is $5 per direct labor hour multiplied by 7,000 hours, which equals $35,000. The actual overhead incurred was $38,000. Therefore, the overhead was underapplied by $3,000 ($38,000 - $35,000).

Jensen Fly Fishing Shop Applies Overhead at a Rate of $5