The management of Chaloux Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The Corporation's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours.

Estimated at beginning of year

Capacity Actual

Machine hours 17,000 21,00 17,40

Manufactoring overhead 57,120 57,120 57,120

If the Corporation bases its predetermined overhead rate on capacity, by how much was manufacturing overhead underapplied or overapplied? A. $9,792 overapplied B. $1,344 underapplied C. $1,344 overapplied D. $9,792 underapplied