Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $385,900; materials of $417,000 and direct labor of $227,000. During the year Adams incurred $408,900 in materials costs, $403,400 in overhead costs and $231,000 in direct labor costs. Compute the amount of under- or overapplied overhead for the year.

Group of answer choices

$10,700 underapplied.

$5500 underapplied.

$17,500 underapplied.

$10,700 overapplied.

$17,500 overapplied.