Answer:
Overapplied overhead= $7,575
Explanation:
<u>First, we need to calculate the predetermined overhead rate:</u>
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 1,250,000 / 40,000
Predetermined manufacturing overhead rate= $31.25 per machine hour
<u>Now, we can allocate overhead:</u>
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 31.25*4,780
Allocated MOH= $149,375
<u>Finally, the over/under allocation:</u>
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 141,800 - 149,375
Overapplied overhead= $7,575
