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:

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Overhead applied = (Actual direct professional labor hours / Estimated direct professional labor hours) * Estimated overhead= (14,500 / 15,000) * $150,000= $144,000Overhead underapplied = Actual overhead costs - Overhead applied= $146,000 - $144,000= $1,000