Fossil Manufacturing uses a predetermined overhead rate of $$18\mathrm{.}80$ per direct labor$-$hour. This $12,000$ estimated direct$-$labor$-$hours and $$225,600$ of estimated total manufacturing overhead. The company incured actual manufacturing overhead costs of $$224,000$ and $11,500$ direct labor$-$hours.

Required:

a$.$ Determine the amount of underapplied or overapplied manufacturing overhead for the period.

b$.$ Assuming that the company closed manufacturing overhead to cost of goods sold, make the journal entry to close manufacturin overhead.

c$.$ What is the effect of this entry on the company's gross margin?