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Selected data for the production department of Roller Manufacturing Ltd is presented below:
Estimated overhead cost per year $280,000
Estimated direct labour cost per year ($15 per hour) is $300,000
Actual manufacturing overhead for May $24,000
Actual direct labour cost for May (1800 hours) is $25,560
Assume that direct labour hours is the basis for allocating manufacturing overhead.
Problem 1: By what amount is manufacturing overhead under or over applied during May?
a. $3000 over applied
b. Neither under or over applied
c. $1200 under applied
d. $667 under applied
e. $1200 over applied
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