Overhead cost - Accounting? -

Feeman Company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $150,000 and direct labor hours would be 10,000. The actual figures fo the year were $186,000 for manufacturing overhead and 12,000 direct labor hours. The cost records for the year will show:????I know the answer is Underapplied overhead of $6,000. I have no idea how they reach this answer. Can anyone help?

Use the actual figures.......they are the ones that count. $ 186,000You add up the gross sales.(186,000)Then you subtract the costs. ( Labor Material, etc.)( 12,000 for labor and 6,000 for rent, electricity bill, etc.)Thus, the costs you are going to subtract is 12, 000 + 6,000=18,000(Gross) (Cost)180, 000 - 18,000 is 90% profit. 180,000 - 18,000 = 162, 000 162, 000 is the profit....and 162,000 is 90% of the gross of 180,000 Underapplied means the same thing as not applied ..not applied are the 6,000 in other costs...in other words..they give the labor as: 12,000...the costs that are missing (underapplied) is 6,000.Learn that words like underapplied means the items that are not given...its like me using words, that only someone that took that class would know.SUMMARYThe cost records bottom line is they made 90% profit or $162,000.