Test Company produces a product that passes through two departments: Department 1 and Department 2. Test Company determines product cost using a normal cost system. The company applies overhead using departmental overhead rates. Overhead in Department 1 is applied based on machine hours. Overhead in Department 2 is applied based on direct labor hours. The company prepared the following estimates at the beginning of the year.

	Department 1	Department 2	Total
Prime cost	$375,000	$700,000	$1,075,000
Overhead cost	$420,000	$240,000	$660,000
Direct labor hours	16,000	50,000	66,000
Machine hours	100,000	20,000	120,000

During the year, Test Company reported the following actual results.

	Department 1	Department 2	Total
Prime cost	$475,000	$850,000	$1,325,000
Overhead cost	$450,000	$300,000	$750,000
Direct labor hours	20,000	60,000	80,000
Machine hours	125,000	25,000	150,000

Calculate the total overhead variance for the year.

a. $87,000 overapplied b. $63,000 underapplied c. $63,000 overapplied d. $87,000 underapplied