Your Company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated its predetermined overhead rate to be $4 per direct labor hour since it estimated total manufacturing overhead cost at $420,000 and direct labor-hours at 90,000 hours. The actual overhead cost incurred during the year was $400,000 and the actual direct labor-hours incurred on jobs during the year was 105,000 hours. What is the difference between the applied manufacturing overhead and the actual manufacturing overhead?

Group of answer choices

$20,000 overapplied

$40,000 underapplied

$40,000 overapplied

$20,000 underapplied