Southern Manufacturing applies overhead to its products based on direct labor hours. During 2011 the company allocated overhead using a predetermined overhead rate of $5.25. At the end of 2011 it was determined that overhead was underapplied by $10,000. Which of the following could not be a possible reason for overhead being underapplied?
A) Estimated overhead costs differed from actual overhead costs.
B) Estimated direct labor hours differed from actual direct labor hours.
C) The cost driver does not have enough correlation with overhead costs.
D) Applied overhead was higher than actual overhead.
D
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