Exercise 3-4 (Algo) Underapplied and Overapplied Overhead [LO3-4] Osbarn Manutacturing uses a predetermined overhead rate of $18.50 per direct labor-hour. This predetermined rate was based on a cost formula that estimates $227,550 of total manufacturing overhead for an estimated activity level of 12,300 direct labor-hour. The company actually incurred $221,000 of manufacturing overhead and 11,800 direct labor-hours during the perlod. Pequired: 1. Determine the amount of underapplievi or overapplied manufocturing overhead for the period. 2. Assume thot the company's underapplied or overapplied overtead is closed to Cost of Goods Sold. Would the joumal entry to dispose of the underapplied or overapplied overhead increase or decrease the company's gross margin? By how much