Pace Manufacturing expected total production costs for the year to include $270,000 of overhead, $450,000 of materials, and $180,000 in direct labor. Overhead is applied based on direct labor cost. Actual production costs were overhead of $268,000, $505,000 in materials used, and $198,000 in labor. All of the goods were completed. How much is the amount of over- or under-applied overhead?
a. $2,000 under-applied
b. $27,000 over-applied
c. $29,000 over-applied
d. $29,000 under-applied