Reference no: EM132542003

Estimated data for Lorien Company for Year 1 are as follows:

Direct materials to be purchased...................................................... $35,000

Indirect labor.......................................................................................... 10,000

Wages of janitors in corporate office building................................. 47,000

Factory building rent............................................................................. 60,000

Depreciation on production equipment............................................. 20,000

Administrative office supplies............................................................. 25,000

Estimated direct labor hours: 40,000 hours

Actual data for Year 1 are as follows:

Total manufacturing overhead: $110,000

Direct labor hours: 35,000 hours

Question 1: The predetermined manufacturing overhead rate is determined on the basis of direct labor hours. Which ONE of the following statements is TRUE?

1. Applied overhead was LESS than actual overhead by $20,000
2. Applied overhead was LESS than actual overhead by $10,000
3. Applied overhead was MORE than actual overhead by $31,250
4. Applied overhead was MORE than actual overhead by $10,000
5. Applied overhead was LESS than actual overhead by $31,250
6. Applied overhead was MORE than actual overhead by $12,250
7. Applied overhead was MORE than actual overhead by $20,000
8. Applied overhead was LESS than actual overhead by $12,250