Carlo Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. The company estimated manufacturing overhead at $255,000 for the year and direct labour hours at 100,000 hours. Actual manufacturing overhead costs incurred during the year totalled $282,750; actual direct labour hours were 105,000. What was the overapplied or underapplied overhead for the year?

Multiple Choice

• $15,000 overapplied.

• $2,250 underapplied.

• $2,250 overapplied.

• $15,000 underapplied.