Question: Peggy (Pty) Ltd uses a predetermined overhead rate based on direct labour cost to apply manufacturing overhead to jobs. For the year ended December 31,

Peggy (Pty) Ltd uses a predetermined overhead rate based on direct labour cost to apply manufacturing overhead to jobs. For the year ended December 31, Peggy's estimated manufacturing overhead was R700 000, based on an estimated volume of 60 000 direct labour hours, at a direct labour rate of R8.00 per hour. Actual manufacturing overhead amounted to R720 000, with the actual direct labour cost of R425 000. For the year, the manufacturing overhead was:

		underappplied by R20 000
		overapplied by R20 000
		overapplied by R100 208
		underapplied by R100 208

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