At the beginning of the year, Zinc Inc.estimated that overhead would be $115,000 and direct labor hours would be 23,000.At the end of the year, actual overhead was $175,900 and there were actually 35,000 direct labor hours. What is the overhead variance?
A) $600 overapplied
B) $900 underapplied
C) $300 underapplied
D) $700 overapplied
E) $800 underapplied

Question

Quizplus · Accepted Answer

Predetermined Overhead Rate = $115,000 / 23,000 direct labor hour = $5 per direct labor hour
Applied Overhead = $5 × 35,000 direct labor hours = $175,000
Overhead Variance = Actual Overhead - Applied Overhead = $175,900 - $175,000 = $900 underapplied overhead

At the Beginning of the Year, Zinc Inc