Under-Absorbed Overheads Formula

Steps:

• Calculate absorbed overheads: $20 absorption rate × 6100 actual hours =$122,000.
• Under-absorbed overheads = actual overheads - absorbed overheads.
• Given under-absorption of $3000, actual overheads =$122,000 + $3000 =$125,000.

Why D is correct:

• Under-absorbed overheads are defined as actual overheads exceeding absorbed overheads (rate × actual hours), so actual = absorbed + under-absorbed.

Why the others are wrong:

• A: Equals budgeted absorbed overheads ($20 × 6000 =$120,000), ignoring actual hours and under-absorption.
• B: Overstates by adding under-absorption to budgeted absorbed ($120,000 +$3000 = $123,000, but uses wrong base).
• C: Subtracts under-absorption from absorbed ($122,000 -$3000 = $119,000), implying over-absorption.

Final answer: D