Analyzing underapplied or overapplied overhead. The New Britain Company uses the direct labor hours method for applying overhead. The overhead application rate for 19X8 is $8.60 per hour, based on expected fixed costs of $348,000 and expected variable costs of $684,000 with a total volume of 120,000 hours.

During the year, the company actually operated for 115,800 hours, incurring fixed overhead of $348,000 and variable overhead of $637,880.

Instructions 1. Compute the total underapplied or overapplied overhead for the year.
2. Analyze the total overapplied or underapplied overhead into a volume variance and a spending variance.