Developing and Using a Predetermined Overhead Rate: High$-$Low Cost Estimation

pay overtime in some months and then lay employees off in others." She commented, "While there are natural variations in customer demand, the accounting system seems to amplify this variation."

$($b$.)$ Assume that the Mattoon Components Company had the following total manufacturing overhead costs and direct labor hours in $2016$ and $2017$ :

Use the high$-$low method to develop a cost estimating equation for total manufacturing overhead.

Total costs $=$ q

$+$$

$($c$.)$ Develop a predetermined rate for $2018,$ assuming $25,000$ direct labor hours are budgeted for $2018.$

Round answers to two decimal places.

per direct labor hour

$($d$.)$ Assume that the actual level of activity in $2018$ was $30,000$ direct labor hours and that the total $2018$ manufacturing overhead was $$250,000.$ Determine the underapplied or overapplied manufacturing overhead at the end of $2018.$

Do not use a negative sign with your answer.