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 $200,100 and direct labour hours would be 16,000. The actual figures for the year were $196,000 for manufacturing overhead and 20,000 direct labour hours. The cost records for the year will show which of the following? (Round predetermined overhead rate to 2 decimal places.)

Multiple Choice

Overapplied overhead of $54,200.

Underapplied overhead of $30,000.

Underapplied overhead of $54,200.

Overapplied overhead of $6,000.