Custom Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine hours. At the beginning of the year, the company made the following estimates:

Machine-hours required to support estimated production	100,000
Fixed manufacturing overheadcost	$600,000
Variable manufacturing overhead cost per machine-hour	$4.00

Required:

1. Calculate the plantwide predetermined overhead rate. (1 mark)

During the year, Job A23 was started and completed. The following information was available with respect to this job:

Direct materials	$540
Direct labour costs	$120
Machine-hours used	59

1. Calculate the total manufacturing cost assigned to Job A23. (1 mark)
2. If Job A23 includes 50 units, what is the unit product cost for this job? (1 mark)

The company actually incurred $975,000 of manufacturing overhead and 98,000 machine hours during the year for all jobs.

1. Determine the amount of underapplied or overapplied manufacturing overhead for the year. (1 mark)
2. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the journal entry to dispose of the underapplied or overapplied overhead increase or decrease the company's gross margin? (1 mark)