Answer:
The correct answer is $5,160.
Explanation:
According to the scenario, the given data are as follows:
Estimated OH = $88,480
Estimated direct labor hour = 2,800 labor hour
So, Estimated OH per labor hour = $88,480 ÷ 2,800 = $31.6 / labor hour
Actual OH = $80,160
Actual Direct labor hour = 2,700 labor hour
Now, Applied OH = Estimated OH per labor hour × Actual Direct labor hour
= $31.6 × 2700
= $85,320
Since, Applied OH is Greater than Actual OH, it is underapplied OH.
Underapplied OH = Applied OH - Actual OH
= $85,320 - $80,160
= $5,160.
Hence, the underapplied OH for the year was $5,160.
