During the year just completed, Paul Company used a predetermined overhead rate of

$3.50 per direct labour hour, based on an estimate of 22,000 direct labour hours to be

worked during the year. Actual overhead cost and activity during the year were:

Actual manufacturing overhead cost incurred

$90,000

Actual direct labour hours worked

25,000

What was the under- or overapplied overhead for the year?

A)

$2,500 overapplied.

C)

$10,500 overapplied.

B)

$2,500 underapplied.

D)

$13,000 underapplied.