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Top Ltd uses a job order costing system and applies factory overhead, based on direct labour hours, at a rate of $2 per direct labour

Top Ltd uses a job order costing system and applies factory overhead, based on direct labour hours, at a rate of $2 per direct labour hour. The data relating to production for last period is: Direct materials: $13,000 Indirect materials: 2,300 Direct labour (18,000 hours): 54,000 Production supervisor salaries: 13,700 Maintenance costs: 7,000 Factory rent: 8,100 Factory utilities: 1,800 Depreciation on machinery: 2,200 The overhead under or over-applied after overhead has been charged to production is:

$900 over-applied.
$2,700 over-applied.
$2,700 under-applied.
$900 under-applied.

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