Pine Publishing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs.At the beginning of the year the Corporation estimated its total manufacturing overhead cost at $500,000 and its direct labor-hours at 125,000 hours.The actual overhead cost incurred during the year was $450,000 and the actual direct labor-hours incurred on jobs during the year was 115,000 hours.The manufacturing overhead for the year would be:

A) $10,000 underapplied.
B) $10,000 overapplied.
C) $50,000 underapplied.
D) $50,000 overapplied.

The predetermined overhead rate can be calculated as follows:
Predetermined overhead rate = Estimated total manufacturing overhead cost / Estimated direct labor-hours
= $500,000 / 125,000 hours
= $4 per direct labor-hour

Using this rate, we can calculate the total overhead applied to jobs as follows:
Total overhead applied = Predetermined overhead rate x Actual direct labor-hours incurred on jobs
= $4 per hour x 115,000 hours
= $460,000

Since the actual overhead cost incurred during the year was $450,000, the overhead was overapplied by $10,000 ($460,000 - $450,000). Therefore, the answer is B.

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $500,000 ÷ 125,000 direct labor-hours = $4 per direct labor-hour
Overhead over or underapplied