Brief Exercise $3-7$ Determining Under$-$ and Overapplied Overhead.

Damas Corp. uses a predetermined overhead rate of $$30\mathrm{.}00$ per direct labour$-$hour. This predetermined rate was based on $12,000$ estimated direct labour$-$hours and $$360,000$ of estimated total manufacturing overhead.

The company incurred actual total manufacturing overhead costs of $$356,500$ and $11,500$ total direct labour$-$hours during the period.

Required:

$1.$ Determine the amount of underapplied or overapplied manufacturing overhead for the period.

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$2.$ Assuming that the entire amount of the underapplied or overapplied overhead is closed out to cost of goods sold, what would be the effect of the underapplied or overapplied overhead on the company$$s gross margin for the period?