Gitano Products uses job-order costing and applies overhead cost to jobs based on direct materials used in production (not on the basis of raw materials purchased). Its predetermined overhead rate is based on a cost formula that estimated $126,000 of manufacturing overhead for an estimated allocation base of $90,000 direct material dollars to be used in production. The company provided the following data for the just completed year: Purchase of raw materials Direct labor cost Manufacturing overhead costs: Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building $ 135,000 $ 86,000 $ 124,400 Ending $ 8,700 $ 18,000 $ 13,000 $ 8,400 $ 36,000 Beginning Raw Materials $ 25,000 $ 14,000 Work in Process $ 50,000 $ 39,000 Finished Goods $ 70,000 $ 60,000 Required: 1. Compute the predetermined overhead rate. 2. Compute the amount of underapplied or overapplied overhead.