Meger Manufacturing Uses the Direct Labor Cost Method for Applying

Multiple Choice

Meger Manufacturing uses the direct labor cost method for applying factory overhead to production.The budgeted direct labor cost and factory overhead for the previous fiscal year were $1,000,000 and $800,000,respectively.Actual direct labor cost and factory overhead were $1,100,000 and $825,000,respectively. What is the amount of under- or overapplied factory overhead?

A) $25,000 overapplied
B) $55,000 overapplied
C) $80,000 overapplied
D) $50,000 underapplied