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Osborn Manufacturing uses a predetermined overhead rate of $18.20per direct labor- hour. This predetermined rate...

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Accounting

Osborn Manufacturing uses a predetermined overhead rate of $18.20per direct labor- hour. This predetermined rate was based on a cost formula that estimated $218,400 of total manufacturing overhead for an estimated activity level of 12,000 direct labor- hours.

The company incurred actual total manufacturing overhead costs of $215,000 and 11,500 total direct labor- hours during the period.

  1. Determine the amount of under applied or over applied manufacturing over head for the period?
  2. Assuming the entire amount of the underapplied or overapplied overhead is closedout to Cost of Goods Sold, what would be the effect of the underapplied or overapplied overheadon the company's gross margin for the period?

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