Zhao Company uses a predetermined overhead rate to allocate overhead based on Direct

Labor cost. This year$$s budget includes Overhead equal to $$500,000$ and Direct Labor cost of

$$625,000.$ This year$$s actual Direct Labor cost equaled $$600,000$ and the actual Overhead incurred

equaled $$475,000.$

Calculate the over$/$under applied Overhead for the year. Clearly indicate whether overhead is Over

or Under $($O$/$U$)$ applied. Show your calculations.