Morris Company applies overhead based on direct labor costs. For the current year, Morris Company estimated total overhead costs to be $400,000, and direct labor costs to be $2,000,000. Actual overhead costs for the year totaled $380,000, and actual direct labor costs totaled $1,800,000. At year-end, Factory Overhead is:

Select one:

a. Underapplied by $200,000

b. Overapplied by $200,000

c. Overapplied by $20,000

d. Neither overapplied nor underapplied

e. Underapplied by $20,000