Quality Jewelleries estimated its overhead would be $100,000 and would require 25,000 machine hours in 2021. The following information relates to its production activity and costs for 2021:

Required:

1. Determine the predetermined overhead rate.
2. What is the overhead applied during the year?
3. Was the overhead overapplied or underapplied, and by how much?

4. Should the management be concerned by the over or underapplied amount? Explain