Micro Enterprises Planned to Produce 120,000 Lerts Per Year

Micro Enterprises planned to produce 120,000 lerts per year.Annual overhead,of which 32.5% is variable,is estimated at $320,400.Each lert takes 1.2 machine hours and 3 labor hours to produce.The firm allocates overhead by direct labor hours. In March,when 11,500 lerts were produced,33,500 direct labor hours were recorded and expenditures on overhead amounted to $31,200.Which is true for this month?

A) Over-applied overhead is $495
B) Under-applied overhead is $495
C) Under-applied overhead is $1,385
D) Over-applied overhead is $1,385
E) None of the choices are correct