For Knight Company, the predetermined overhead rate is $150\%$ of direct labor cost. During the month, Knight incurred $$100,000$ of factory labor costs, of which $$85,000$ is direct labor and $$15,000$ is indirect labor. Actual overhead was $$120,000.$

a$.$ Overhead is under applied by $$12,500$

b$.$ Overhead is over applied by $$6,500$

c$.$ Overhead is under applied by $$7,500$

d$.$ Overhead is over applied by $$7,500$