Freeman Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $150,000 and direct labour hours would be 10,000. The actual figures for the year were $186,000 for manufacturing overhead and 12,000 direct labour hours.
The cost records for the year will show which of the following?
A. overapplied overhead of $30,000.
B. underapplied overhead of $30,000.
C. overapplied overhead of $6,000.
D. underapplied overhead of $6,000.
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