Mabidi $($Pty$)$ Ltd $($Mabidi$)$ is a manufacturer of special durable tractor tyres $($units$).$ Mabidi was established in $2002$ by three close friends from university, Motsamai, Wesley and Leeto. Mabidi manufactures two types of tractor tyres: smaller front tires $($FT$)$ and larger rear

tires $($RT$).$

Mabidi has a $31$ August year$-$end.

Mabidi uses the absorption costing system to value its inventories $($tyres$).$ Mabidi operates in a tough competitive environment and therefore uses activity$-$based costing $($ABC$)$ to allocate g fixed manufacturing overheads.

The budgeted financial information for the correctly identified activities and the related fixed manufacturing overheads costs are as follows:

Activity R Cost driver

Machining $2160000$ Machine hours

Assembling $1800000$ Production runs

Quality inspection $1386250$ Number of inspections

Stores receiving $1623750$ Number of deliveries

Stores issuing $830000$ Number of issues

The following budgeted financial information for the two products was prepared for the financial year ended $31$ August $2024$:

FT RT

Budgeted production $($units$)1500700$

Machine hours per unit $10?$

Number of inspections $375250$

Batch size $($units$)500140$

Number of deliveries during the year $450300$

Number of issues from stores $200215$

Additional information relating to the $2024$ financial year:

$1.$ The number of production runs are based on production batch sizes $($units$).$

$2.$ The FT product type total budgeted direct material and direct labour costs are R$3000000$ and R$2200000,$ respectively.

$3.$ The RT product type total budgeted direct material and direct labour costs are R$5000000$ and R$3000000,$ respectively.

$4.$ The actual manufacturing overheads incurred by Mabidi in the $2024$ financial year amounted to R$9$ million. The total actual machine hours for the same financial year were $150000$ machine hours.

$5.$ One unit of RT takes three times the machine time that one unit of FT takes, due to its size and thickness.

Calculate the under$-$ or over$-$applied fixed manufacturing overheads for the year ended $31$ August $2024,$ using the traditional costing method.

Note: Also state clearly whether the amount is under or over$-$applied.

For this required, use: Budgeted machine hours of $156000$ as the

basis for calculating the single pre$-$determined allocation rate.