Use the following information to answer questions 3 and 4: The following cost da

ID: 2562973 • Letter: U

Question

Use the following information to answer questions 3 and 4:

The following cost data relate to the manufacturing activities of Chang Company during the just completed year:

Manufacturing overhead costs incurred:

Indirect materials

$ 15,600

Indirect labor

$ 136,000

Property taxes, factory

$ 8,600

Utilities, factory

$ 76,000

Depreciation, factory

$ 250,700

Insurance, factory

$ 10,600

Total actual manufacturing overhead costs incurred

$ 497,500

Other costs incurred:

Purchases of raw materials (both direct and indirect)

$ 406,000

Direct labor cost

$ 66,000

Inventories:

Raw materials, beginning

$ 20,600

Raw materials, ending

$ 30,600

Work in process, beginning

$ 40,600

Work in process, ending

$ 70,600

The company uses a predetermined overhead rate to apply overhead cost to jobs based on an estimated machine-hours of 20,500. The rate for the year was $25 per machine-hour. A total of 20,300 machine-hours was recorded for the year.

What was the underapplied or overapplied overhead cost for the year?

A. $10,000 overapplied overhead

B. $10,000 underapplied overhead

C. $15,000 overapplied overhead

D. $15,000 underapplied overhead