Figure 5-1

Figure 5-1.Morrow Company applies overhead based on direct labor hours. At the beginning of the year, Morrow estimates overhead to be $620,000, machine hours to be 180,000, and direct labor hours to be 40,000. During February, Morrow has 4,200 direct labor hours and 8,000 machine hours.
-Refer to Figure 5-1. If the actual overhead for February is $64,700, what is the overhead variance and is it overapplied or underapplied?

A) $400 underapplied
B) $200 overapplied
C) $1,000 underapplied
D) $400 overapplied
E) $600 overapplied

Correct Answer:

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