7.

Carlo Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. The company estimated manufacturing overhead at $255,000 for the year and direct labour hours at 75,000 hours. Actual manufacturing overhead costs incurred during the year totalled $265,500; actual direct labour hours were 85,000. What was the overapplied or underapplied overhead for the year?

Multiple Choice

• $23,500 underapplied.

• $10,500 underapplied.

• $10,500 overapplied.

• $23,500 overapplied.