Question:

1. Hamilton Company uses job-order costing. Manufacturing overhead is applied using a predetermined rate of 150% of direct labor cost. Any underapplied or overapplied manufacturing overhead is closed to Cost of Goods Sold at the end of each month.

Additional information is available as follows:

• Job 101 was the only job in process at January 31. The job cost sheet for this job contained the following costs at the beginning of the month:

Direct materials	$4000,
Direct labor	$2000,
Applied manufacturing overhead	$3000

Jobs 102, 103, and 104 were started during February.

• Direct materials requisitions for February totaled $26,000.
• Direct labor cost of $20,000 was incurred for February.
• Actual manufacturing overhead was $32,000 for February.
• The only job still in process at February 28 was Job 104, with costs of $2,800 for direct materials and $1,800 for direct labor.

For the month of February, the manufacturing overhead was:

A.$700 overapplied

B.$1000 overapplied

C.$2000 overapplied

D.$2000 underapplied