Lancer charges manufacturing overhead to products by using a predetermined application rate, computed on the basis of machine hours. The following data pertain to the current year:

Estimated (budgeted) manufacturing overhead: $1,080,000

Actual manufacturing overhead: $945,000

Estimated (budgeted) machine hours: 45,000

Actual machine hours: 31,500

Which of the following choices denotes the correct status of manufacturing overhead at year-end?

a.Overapplied by $135,000.

b.Underapplied by $135,000.

c.Overapplied by $189,000.

d.Underapplied by $189,000.

e.Overapplied by $270,000.