The correct statement is that the under applied overheads for Osborn Manufacturing Company is calculates as a negative balance of $5700 at the overhead rate of $18.20.
Explanation:
The calculation of the overhead costs is done by using the formula for under applied overheads and calculating the required values from such given information.
Calculation of manufacturing overheads
The formula for the calculation of manufacturing overheads whether under applied or over applied can be determined is as below,
Under - applied Overheads = Applied Overhead - Actual overhead
However, to calculate further the actual overheads can be calculated as below by applying the given values to the formula,
Applied Overheads = Actual Level of Direct labour hours x overhead rate hours
Applied Overheads = 11500 x 18.20
Applied Overheads = $209300
Now applying the values to the formula, we get,
Under - applied Overheads=209300 - 215000
Under - applied Overheads = -$5700
Hence, the correct statement is that under applied overheads for Osborn Manufacturing Company is calculated as a negative balance of $5700 at the overhead rate of $18.20.
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