La bicyclette Co. manufactures and sells bicycles. The company uses a job order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The company has one single cost pool and the POHR is based on machine-hours. The following data are available for year 2018: Budgeted DM: $1,125,000 Budgeted DL: $ 1,750,000 Budgeted Indirect Cost: $4,500,000 Budgeted machine hour: 150,000 hours Actual DM: $950,000 Actual DL: $2,265,000 Actual Indirect Cost: $3,575,000 Actual machine hour: 125,000 hours Required: Compute the over/underapplied overhead.

$175,000 underallocation

$175,000 overallocation

$925,000 overallocation

$585,000 overallocation