The BCA Company estimated variable factory overhead for the year at $24,000. It

Question

The BCA Company estimated variable factory overhead for the year at $24,000. It actually experienced variable factory overhead of $30,000 in the same year. The predetermined overhead application rate for this type of overhead had to be set at $3 per Direct Labor Hour (DLH) and the firm had estimated working 8000 DLH during the period but actually ended up working only 7000 DLH during the period. The amount by which variable factory overhead is over - or under-applied is :

a) there is no over or under applied overhead in this case

b) $6000 under-applied

c) $3000 over-applied

d) $6000 over-applied

e) $9000 under-applied

Explanation / Answer

c) $3000 over-applied

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