On the year-end trial balance of Jo Company, the credit entry in the finished goods inventory account was $3,630,000, and the credit entry to the manufacturing overhead (MOH) control account was $1,985,000. The company’s income statement after adjustments shows that the cost of goods sold (COGS) was $3,540,000. The company uses a normal cost system and closes the balance in the manufacturing overhead control account to the cost of goods sold.

Required:

1. Determine if the manufacturing overhead has been under- or overapplied.

2. Compute the amount by which the manufacturing overhead has been under- or overapplied.