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. You review the accounting records at the end of the year.You learn that Micro made 125,000 lerts in the year,using 356,000 direct labor hours.Actual overhead expenditures totaled $333,333.Which is true with respect to Under/Over-applied overhead?

A) Under-applied overhead is $417 and should be credited to Cost of Goods Sold
B) Under-applied overhead is $12,933 and should be prorated across Raw Materials,Work in Process,and Finished Goods inventories and Cost of Goods Sold
C) Under-applied overhead is $16,493 and should be charged to Cost of Goods Sold
D) Over-applied overhead is $417 and should be credited to Cost of Goods Sold
E) None of the choices are correct