Freeman Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $150,000, direct labour hours would be 10,000, and direct labour costs would be $120,000. The actual figures for the year were $186,000 for manufacturing overhead, 12,000 direct labour hours, and $160,000 of direct labour costs. The cost records for the year will show which of the following? 1) Underallocated overhead of $6,000. 2) Underallocated overhead of $14,000. 3) Overallocated overhead of $6,000. 4) Overallocated overhead of $14,000. M Natural Desserts has 2,500 gallons of paint in WIP inventory, with all direct materials added at the end. There is 12,000 gallons completed and transferred out. What are equivalent units in ending WIP inventory for conversion if the paint is 90% through the process? 1) 2,250 2) 12,500 3) 2,500 4) 0