Answer:
Karvel would have applied more overhead to Work in Process than the actual amount of overhead cost for the year.
Option A is correct.
Explanation:lj;kxzx
Predetermined overhead rate = Estimated overhead cost/estimated machine hours.
Therefore, the overhead rate of Karvel Corporation = $300,000 /75,000 = $4.00 per hour.
Now, we need to apply the Predetermined overhead rate on the actual machine hours.
At 75,000 machine-hours, the amount that would have been applied = 75,000*4 = $300,000.
Over/under- applied cost = Actual overhead cost - applied overhead cost.
Actual overhead cost = $290,000.
Applied overhead cost = $300,000
Under- applied cost = $290,000 - $300,000 = -$10,000.
Thus, Karvel Corporation applied more overhead to Work in Process than the actual amount of overhead cost for the year.
