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32. For Knight Company, the predetermined overhead rate is 150% of direct labor cost. During the month, Knight incurred $100,000 of factory labor costs, of which $85,000 is direct labor and $15,000 is indirect labor. Actual overhead was $120,000. a. Overhead is under applied by $12,500 b. Overhead is over applied by $6,500 c. Overhead is under applied by $7,500 d. Overhead is over applied by $7,500

32. For Knight Company, the predetermined overhead rate is 150% of direct labor cost. During the month, Knight incurred $100,000 of factory labor costs, of which $85,000 is direct labor and $15,000 is indirect labor. Actual overhead was $120,000. a. Overhead is under applied by $12,500 b. Overhead is over applied by $6,500 c. Overhead is under applied by $7,500 d. Overhead is over applied by $7,500

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 3EA: A company estimated 100,000 direct labor hours and $800,000 in overhead. The actual overhead was...
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32. For Knight Company, the predetermined overhead rate is 150% of direct labor cost. During the month, Knight incurred $100,000 of factory labor costs, of which $85,000 is direct labor and $15,000 is indirect labor. Actual overhead was $120,000.

a. Overhead is under applied by $12,500

b. Overhead is over applied by $6,500

c. Overhead is under applied by $7,500

d. Overhead is over applied by $7,500 

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