During the year, Molly Manufacturing incurred $120,000 in actual manufacturing overhead costs. Manufacturing overhead is applied based on machine hours. In 2021, Molly Manufacturing incurred 25,000 machine hours and has a predetermined overhead rate of $5 per machine hour. Was manufacturing overhead overapplied or underapplied? By what amount?

• A. Overapplied by $5,000
• B. Underapplied by $5,000
• C. Overapplied by $95,000
• D. Underapplied by $95,000