Manufacturing overhead is applied based on machine hours. Everything else being equal, which of the following statements is NOT true?
If the estimated machine hours are larger than the actual machine hours, then manufacturing overhead is over-applied.
If the estimated machine hours are larger than the actual machine hours, then manufacturing overhead is under-applied.
If estimated overhead costs are larger than actual overhead costs, overhead is over-applied.
There is no over-/under-applied overhead if estimated overhead cost per unit equal actual overhead cost per unit.
None of the above.
The answer is the first statement. Can someone explain to me the reasoning please?