The following annual amounts pertain to the Wolf Company: Estimated Overhead Costs $ 101,988 Estimated Direct Labor hours 67,992 If actual overhead costs for the year amounted to $106,000 and actual direct labor worked amounted to 70,000 hours, then overhead would be Multiple Choice

overapplied by $1,000.

underapplied by $1,000.

overapplied by $1,012.

underapplied by $1,0

under applied by $1,000.

Explanation:

The formula is shown below:

Predetermined overhead rate = (Total estimated manufacturing overhead) : (estimated direct labor-hours)

= $101,998 : 67,992 hours

= $1.50

Now we have to find the applied overhead which equal to

= Actual direct labor-hours * predetermined overhead rate

= 70,000 hours * $1.50

= $105,000

So, the ending overhead equals to

= Actual manufacturing overhead - actual overhead

= $106,000 - $105,000

= $1,000 under-applied