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Determine over or under applied overhead from the facts given.
The following information was extracted from the accounting records of Bowater Company:
Estimated manufacturing overhead
$260,000
Estimated machine hours
7,500
Actual machine hours worked
8,000
Actual overhead costs incurred:
Indirect materials
$97,500
Indirect labor
$60,000
Utilities
$10,000
Insurance
$25,000
Rent
$70,000
Bowater's amount of overapplied or underapplied overhead would be (round the rate to two decimal places)
a. $18,750 underapplied b. $16,250 overapplied c. $14,860 overapplied d. $2,500 underapplied
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