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Managerial Accounting

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Moderate

Calculating Predetermined OH for Motors

MGRACT-OGZKZN

Sampson Corp applies overhead to jobs on the basis of direct labor hours for servicing motors. During the period the company incurred \$4,950,000 of actual manufacturing overhead costs. Sampson actually worked 190,000 direct labor hours. The predetermined overhead rate used to allocate overhead was \$25.60 per direct labor hour. What amount is over or underapplied?

A

$86,000 underapplied

B

$86,000 overapplied

C

$172,000 underapplied

D

$172,000 overapplied