Reference no: EM132537508

GHI Inc. has commenced work on three jobs during its first year of operations. Costs incurred for each of these jobs are as follows:

                                    Job 1               Job 2                      Job 3

Direct Materials       $100,000          $150,000            $200,000

Direct Labour              $150,000        $200,000            $350,000

Question 1: Overhead is applied to jobs at a rate of $0.20 per direct labour dollar spent. During the year, Job 1 was completed, while Job 2 was completed and sold. Job 3 is still process at the end of the year. Actual manufacturing overhead costs incurred amounted to $160,000. GHI employees worked a total of 55,000 hours during the year. what were GHI's overhead costs for the year?

a) 20,000 under applied

b) 20,000 over applied

c) 55,000 under applied

d) 55,000 over applied