Sawyer Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 48,000 actual direct labor-hours and incurred $644,000 of actual manufacturing overhead cost. The Corporation had estimated that it would work 46,000 direct labor-hours during the year and incur $598,000 of manufacturing overhead cost. The Corporation's manufacturing overhead cost for the year was:

1.overapplied by $20,000

2.underapplied by $26,000

3.overapplied by $26,000

4.underapplied by $20,000