Sears ended year December 31, 2010:

Budgeted direct labor hours 15500

Actual direct labor hours 16200

Budgeted factory overhead $73625

Actual factory overhead $74990

What is the amount of over/applied overhead? (the direct labor hours is the cost driver)

1) $1365 underapplied

2) $1365 overapplied

3)$3225 underapplied

4) $1960 overapplied