Hamilton Company applies manufacturing overhead costs to products based on direct labor hours. The company estimates manufacturing overhead cost for the year to be $268,000 and direct labor hours to be 20,000. Actual overhead and actual direct labor hours for the year were $305,000 and 23,800 hours, respectively.

Required:

1. Compute over- or underapplied overhead.

2a. Which accounts will be affected by the over- or underapplied manufacturing overhead?

2b. Will the accounts be increased or decreased to adjust for the over- or underapplied manufacturing overhead?

Q 1.Manufacturing Overhead = ?

Q 2. Which Account will be affected by over- or underapplied manufacturing?

Q 3. Will the accounts be increased or decreased to adjust for the over- underapplied manufacturing over head?