Shire Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated its total manufacturing overhead cost at $400,000 and its direct labour hours at 100,000 hours. The actual overhead cost incurred during the year was $350,000 and the actual direct labour hours incurred on jobs during the year was 90,000 hours. What would be the manufacturing overhead for the year?

Select one:

1. $50,000 underapplied
2. $10,000 underapplied
3. $50,000 overapplied
4. $10.000 overapplied