Berkshire Ltd distributes overhead based on direct labour dollars. The estimated manufacturing overhead for the year was $520 000 and the estimated direct labour dollars for the year were $130 000. Indicate the amount of underapplied or overapplied overhead if actual direct labour was $118 000 and actual manufacturing overhead was $497 400.

Select one: a. $25 400 underapplied

b. $25 400 overapplied

c. $22 600 overapplied

d. $22 600 underapplied