EXERCISE 2-7 Underapplied and Overapplied Overhead [LO2-7] Osborn Manufacturing uses a predetermined overhead rate of $18.20 per direct labor hour. This predeter TAKE mined rate was based on a cost formula that estimates $218.400 of total manufacturing overhead for an TWO estimated activity level of 12,000 direct labor-hours. The company incurred actual total manufacturing overhead costs of $215,000 and 11,500 total direct Actual total manufacturing labor-hours during the period, overhead costs Required: - $198.000 1. Determine the amount of underapplied or overapplied manufacturing overhead for the period. 2. Assuming that the entire amount of the underupplied or overapplied overhead is closed out to Cost of Goods Sold, what would be the effect of the underapplied or overapplied overhead on the company's gross margin for the period? PANINY