Overheads are applied to work-in-process for calculating cost of manufacturing. BX company underestimated the manufacturing overhead budget and underestimates the activity base for the year, what is the result?

Select one:

a.Over-applied factory overhead.

b.Under-applied factory overhead.

c.Overstated finished goods inventory.

d.Understated work in process inventory.

e.Cannot be determined by the information given.