The following information is available from the Terry Company:

Actual total factory overhead cost incurred$25,000 Actual fixed overhead cost incurred$10,400 Budgeted fixed overhead expenses$11,000 Actual direct labor hours (DLH) worked 4,400 Standard DLHs for this period's production (output) 4,000 Standard variable overhead rate per DLH$3.00 Standard fixed overhead rate per DLH$2.50

The total under or overapplied overhead for Terry Company for the period, to the nearest dollar, is:

$3,000 underapplied

1. Total over/underapplied OH = Actual total OH ? Standard OH cost applied to production during the period.

2. Actual OH cost incurred this period = $25,000 (given).

3. Standard OH rate/DLH = Standard variable OH rate/DLH + Standard fixed OH rate/DLH = $3.00/DLH (given) + $2.50/DLH (given)

4. Standard OH cost applied to production = Standard OH rate/DLH × Std. DLHs for this period's produced = $5.50/DLH × 4,000 DLHs (given) = $22,000.

5. Therefore, total over/underapplied OH = $25,000 (see (2) above) ? $22,000 (see (4) above) = $3,000 underapplied.