Siba factory supplies the following information. Manufacturing overhead is applied on the basis of direct labour hours.

• Estimated manufacturing overhead costs $2 000 000
• Estimated direct labour hours 250 000
• Actual direct labour hours 260 000
• Actual manufacturing overhead costs $2 200 000

Compute the amount of overapplied or underapplied overhead.

a.$120 000 underapplied

b.200 000 overapplied

c.$200 000 underapplied

d.$120 000 overapplied