During 2015, Michael Company applied overhead using a job-order costing system at a rate of $12 per direct labor hours. Estimated direct labor hours for the year were 150,000, and estimated overhead for the year was $1,800,000. Actual direct labor hours for 20x1 were 140,000, and actual overhead was $1,700,000. What is the amount of under- or over-applied overhead for the year?

$100,000 under-applied $20,000 under-applied $100,000 over-applied $120,000 over-applied

Question 7. Manufacturers follow four steps to implement a manufacturing overhead allocation system. What is the first step?

Select an allocation base and estimate the total amount that will be used during the year. Allocate some manufacturing overhead to each individual job. Calculate a predetermined manufacturing overhead rate. Estimate total manufacturing overhead costs for the coming year.