ABC Ltd uses a predetermined overhead rate based on machine hours. The following data is provided for the year ended 31 December 2025:

Estimated manufacturing overhead: $200,000

Estimated machine hours: 40,000 hours

Actual manufacturing overhead: $220,000

Actual machine hours: 42,000 hours

Required: a. Calculate the predetermined overhead rate. b. Compute the applied overhead for the year. c. Determine the over-applied or under-applied overhead and prepare the necessary journal entry to close the overhead account. d. Explain the potential causes and implications of over-applied or under-applied overhead.