Austin Company uses a job order cost accounting system. The company's executives estimated that direct labor would be $10,500,000 (1,050,000 hours at $10/hour) and that factory overhead would be $6,600,000 for the current period. At the end of the period, the records show that there had been 350,000 hours of direct labor and $5,280,000 of actual overhead costs. Using direct labor hours as the allocation base, calculate the under- or overapplied overhead for the period
$3,078,500 underapplied.
$4,398,500 underapplied.
$8,797,000 underapplied.
$8,797,000 overapplied.
$1,050,000 underapplied.