Cretin Enterprises uses a predetermined overhead rate of $7.50 per direct labour-hour. This predetermined rate was based on 16,000 estimated direct labour-hours and $120,000 of estimated total manufacturing overhead. The company incurred actual total manufacturing overhead costs of $114,750 and 15,500 total direct labour-hours during the period. There were no beginning inventories, and all goods produced in the period were shipped out to customers before period-end. Required: 1. Determine the amount of underapplied or overapplied manufacturing overhead for the period. 2. What is the effect on gross margin the period? Because manufacturing overhead is by the cost of goods sold would by and the gross margin would