Tech-MFG Limited absorbs overheads based on labour hours. Last year, the company incurred 220,000 labour hours and actual overheads were $3,300,000. Budgeted overheads were $3,400,000 and actual labour hours were 10% above the budgeted labour hours.

Calculate the overhead absorption rate.

a) $15.45 per labour hour

b) $17 per labour hour

c) $17.17 per labour hour

d) $15 per labour hour

Determine the over-application or under-application of overheads last year.

a) $440,000 over-applied

b) $340,000 over-applied

c) $99,000 under-applied

d) $300,000 under-applied