Answer:
1. Amount of overapplied manufacturing overhead = $7,660
2. Company's gross margin will decrease by $7,660
Explanation:
Provided overhead predetermined rate = $20.10
Provided actual hours = 13,400
Therefore overhead cost based on predetermined rate = 13,400 X $20.10
= $269,340
Whereas actual incurred overheads = $277,000
Amount of overapplied manufacturing overhead = $277,000 - $269,340 = $7,660
Now since the cost is increased of goods sold, company's gross margin will decrease with the same amount = $7,660
1. Amount of overapplied manufacturing overhead = $7,660
2. Company's gross margin will decrease by $7,660