Company ABC uses a job-order costing system. The company uses direct labor hour as the allocation base for applying manufacturing overhead cost to individual jobs. At the beginning of the year, the companys estimated manufacturing overhead cost is $1,000,000 and the estimated number of labor hours is 200,000. At the end of the year, the company found that the actual manufacturing overhead cost is $1,200,000 and the actual number of labor hours is 200,000.

1. What is the predetermined overhead rate (POHR)? (2 marks)

2. Did the company underapply or overapply the manufacturing overhead? What is the amount of overapplied or underapplied overhead? (8 marks)