Armour, Inc., an advertising agency, applies overhead to jobs on the basis of direct professional labor hours. Overhead was estimated to be $150,000, direct professional labor hours were estimated to be 15,000, and direct professional labor cost was projected to be $225,000. During the year, Armour incurred actual overhead costs of $146,000, actual direct professional labor hours of 14,500, and actual direct labor cost of $222,000. By year-end, the firm's overhead was:
A. $5,000 underapplied.
B. $4,000 overapplied.
C. $4,000 underapplied.
D. $1,000 overapplied.
E. $1,000 underapplied.
Answer: E
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