Thom Browne Ltd. is a home renovation company. Last month they completed 2 renovations and were still working on another renovation at the end of the month. Overall, the three jobs averaged 1,500 direct labour hours each. If Thom Browne's predetermined overhead rate for the month was $4.25 per Direct Labour Hour and they overapplied overhead by $1,600, how much should their applied manufacturing overhead be?

A.

$12,750.

B.

$6,375.

C.

$20,725.

D.

$17,525.

E.

$19,125.

Van Noten Inc. had applied overhead of $161,000 during March and measured $168,500 of actual overhead at the completion of the month. How will the company be affected by this discrepancy after they make adjustments?

A.

Gross margin will increase by $7,500.

B.

Cost of goods sold will increase by $7,500.

C.

Sales revenue will decrease by $7,500.

D.

Cost of goods sold will decrease by $7,500.

E.

Operating expenses will increase by $7,500.