Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Adams incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Compute the amount of under- or overapplied overhead for the year.
A. $10,000 underapplied.
B. $4,800 underapplied.
C. $17,200 underapplied.
D. $10,000 overapplied.
E. $17,200 overapplied.
Answer: A
Business
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