Solution :
a).
Estimated overhead                                1,250,000
Divide by the estimated machine hours    50,000        
Predetermined overhead rate                      25
Actual machine hours                                  54,300
Multiply by predetermined overhead rate        25
The factory overhead amount applied        $ 1,357,500
b).
Actual factory overhead                              1,348,800
Less : factory overhead amount applied     1,357,500  
The underapplied amount is                       $ 8700