Reference no: EM132746976

Problem 1: Gabriel Co. uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. For the month of October, Avery's estimated manufacturing overhead cost was P300,000 based on an estimated activity level of 100,000 direct labor-hours. Actual overhead amounted to P325,000 with actual direct labor-hours totaling 110,000 for the month. How much was the overapplied or underapplied overhead?

Option 1: P 25,000 underapplied

Option 2: P 25,000 overapplied

Option 3: P 5,000 underapplied

Option 4: P 5,000 overapplied