The overhead in XYZ Ltd is allocated using the number of direct labour hours, and the rate is based on budgeted manufacturing overhead at normal capacity. Normal capacity is 100,000 direct labour hours per annum. In a given year the actual factory overhead incurred was $215,000 and actual direct labour hours worked were 80,000.Overhead was underapplied by $7,000. The budgeted manufacturing overhead at normal capacity must have been:

A. $260,000

B. $222,000

C. $208,000

D.$172,000

E. $268,750