BYC Corporation uses a predetermined overhead rate of $21.40 per direct labour-hour. This predetermined rate was based on a cost formula that estimated $176,550 of total manufacturing overhead for an estimated activity level of 8,000 direct labour-hours. The company incurred actual total manufacturing overhead costs of $172,500 and 8,250 total direct labour-hours during the period. Required: a) Determine the amount of underapplied or overapplied manufacturing overhead for the period. [5 Marks] b) Assuming that the entire amount of the underapplied or overapplied overhead is closed out to cost of goods sold, what would be the effect of the underapplied or overapplied overhead on the company's gross margin for the period? [2 Marks]