Derrald Company manufactures snowboards. Estimated costs for Year 1 were as follows:

Direct labor........................................................................................... $31,000

Bonuses paid to factory supervisors.................................................... 9,000

Interest expense..................................................................................... 32,000

Depreciation on manufacturing equipment..................................... 18,000

Indirect labor.......................................................................................... 11,000

Direct materials...................................................................................... 36,000

Income tax expense.............................................................................. 26,000

Indirect materials................................................................................... 14,000

Property taxes on the corporate office building............................... 18,000

Estimated direct labor hours were 40,000.

Actual data for Year 1 are as follows:

Total manufacturing overhead: $120,000

Direct labor hours: 60,000 hours

The predetermined manufacturing overhead rate is determined on the basis of direct labor hours. What is the overhead rate and how much more or less is it then the actual overhead.

Applied overhead was MORE than actual overhead by $68,000

Applied overhead was MORE than actual overhead by $42,000

Applied overhead was LESS than actual overhead by $22,000

Applied overhead was LESS than actual overhead by $42,000

Applied overhead was LESS than actual overhead by $68,000

Applied overhead was MORE than actual overhead by $52,000

Applied overhead was MORE than actual overhead by $22,000

Applied overhead was LESS than actual overhead by $52,000