Answer:
Overapplied by $52,000.
Explanation:
To know the application of the overhead we need to solve for the predetermined rate first:
we distribute the expected overhead over the expected cost driver. in this case, it is labor hours:
$ 3,900,000 / 130,000 labor hours = $ 30 per hours
Now we calculate the aplication:
<u>actual labor hours x rate:</u>
132,300 x 30 = 3,969,000
Finally we compare with the actual overhead cost:
applied - actual
3,969,000 - 3,917,000 = 52,000
As the cost applied exceed the real cost, we overapplied the voerhead we capitalzie more cost than actual cost.
we face an overapplication of the overhead cost.