Question $3(25$ points$)$

Colby Company estimates that annual manufacturing overhead costs will be $$600,000.$ Estimated annual operating

activity bases are: direct labor cost $$460,000,$ direct labor hours $40,000$ and machine hours $80,000.$ The actual

manufacturing overhead cost for the year was $$601,000$ and the actual direct labor cost for the year was $$456,000.$

Actual direct labor hours totaled $39,800$ and machine hours totaled $79,000.$ Colby applies overhead based on direct

labor hours.

Compute the predetermined overhead rate and determine the amount of manufacturing overhead applied. Determine if

overhead is over$-$ or underapplied and the amount.