Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Adams incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Compute the amount of under- or overapplied overhead for the year.

Multiple Choice

• $10,000 overapplied.

• $17,200 overapplied.

• $10,000 underapplied.

• $17,200 underapplied.

• $4,800 underapplied.