Overhead is charged to jobs at a rate of $50 per machine hour in the fabrication department. This rate is based on estimated 20,000 machine hours, with the variable portion of overhead estimated at $20 per machine hour and fixed overhead estimated at $600,000. Assume the department traced a total of 18,000 machine hours to jobs and had under- applied overhead of $25,000. The plant manager gave the assembly manager an unfavorable annual evaluation based on the $25,000 under-applied overhead. The plant manager claimed that under-applied overhead signals that actual costs are higher than applied cost and thus the assembly manager was not successful in controlling costs. 1. Calculate applied overhead 2. Calculate the actual overhead cost incurred. 3. Based on the estimated cost behavior, what total overhead cost would you predict for the department for 18,000 machine hours? 4. Assuming the estimates of cost behavior used in setting the predetermined rate are reasonable, do you agree with the plant manager? Explain and defend your answer.