The McKenna Collins LLP public accounting firm employs 10 full-time professionals who provide services to clients. All professional labour compensation is traced directly to clients on a per professional labour-hour basis. Any other costs are included in a single indirect-cost pool (same as overhead) and allocated to individual clients according to billable professional labour-hours.

Operating costs and data for the year included the following:

estimatedactual

overhead (indirect) costs1,000,0001,200,000

number of billable professional labour-hours40,00050,000

total professional compensation750,000750,000

Required:

c. Explain qualitativelyandquantitatively (in as much detail as possible) the source(s) of any underapplied or overapplied overhead cost.