Arca Incorporated makes a single product--a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below:

Budgeted (Planned) Overhead:
Budgeted variable manufacturing overhead	$	38,700
Budgeted fixed manufacturing overhead		170,700
Total budgeted manufacturing overhead	$	209,400
Budgeted production (a)		20,000	units
Standard hours per unit (b)		1.50	machine-hours
Budgeted hours (a) (b)		30,000	machine-hours
Applying Overhead:
Actual production (a)		15,000	units
Standard hours per unit (b)		1.50	machine-hours
Standard hours allowed for the actual production (a) (b)		22,500	machine-hours
Actual Overhead and Hours:
Actual variable manufacturing overhead	$	9,812
Actual fixed manufacturing overhead		185,700
Total actual manufacturing overhead	$	195,512
Actual hours		22,300	machine-hours

The total manufacturing overhead is underapplied or overapplied by how much?

Multiple Choice

• $38,462 Underapplied

• $13,888 Overapplied

• $38,462 Overapplied

• $13,888 Underapplied