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Dynamic Designs, Inc. has developed a new design to produce track shoes that are used in cross-country races. The company's shoe design is innovative in

Dynamic Designs, Inc. has developed a new design to produce track shoes that are used in cross-country races. The company's shoe design is innovative in that the insole is made of a product that provides a greater cushion and adapts more easily to a runner's foot. Management estimates expected annual capacity to be 80,000 units; overhead is applied using expected annual capacity. The company's cost accountant predicts the following current year activities and related costs:

Standard unit variable manufacturing costs

P140

Variable unit selling expense

P6

Fixed manufacturing overhead

P2,400,000

Fixed selling and administrative expenses

P164,000

Selling price per unit

P225

Units of sales

70,000

Units of production

81,000

Units in beginning inventory

15,000

Other than any possible under- or overapplied fixed overhead, management expects no variances from the previous manufacturing costs. Under- or overapplied fixed overhead is to be written off to Cost of Goods Sold.

Determine the amount of under- or overapplied fixed overhead using absorption costing.

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