Sawyer Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 49,000 actual direct labor-hours and incurred $658,000 of actual manufacturing overhead cost. The Corporation had estimated that it would work 47,000 direct labor-hours during the year and incur $611,000 of manufacturing overhead cost. The Corporation’s manufacturing overhead cost for the year was:
underapplied by $21,000
overapplied by $26,000overapplied by $21,000underapplied by $26,000
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