Overhead Absorption Using Predetermined Rate Steps:

• Calculate overhead absorption rate: budgeted overhead expenditure ÷ budgeted direct labour hours = $15,000 ÷ 15,000 =$1 per direct labour hour.
• Calculate absorbed overhead: absorption rate × actual direct labour hours = $1 × 8,000 =$8,000.
• Determine over/under absorption: actual overhead expenditure - absorbed overhead = $16,000 -$8,000 = $8,000 under absorption.

Why D is correct:

• Under absorption equals actual overhead minus overhead absorbed at the predetermined rate based on budgeted data applied to actual activity.

Why the others are wrong:

• A. $3000 over: Reverses the under absorption result and uses incorrect amount.
• B. $8000 over: Reverses the under absorption to over absorption.
• C. $3000 under: Likely miscalculates volume variance alone or uses wrong hours difference without full formula.

Final answer: D