Richmond Company uses a job order costing system that applies overhead cost to jobs on the basis of Machine hours. The company pre-determined overhead rate of $2.80 per machine hour was based on cost formula that estimates $232,400 of total manufacturing overhead for an estimated activity level of 83000 Machine hours.

Required:

1. Assume that during the year the company works 78,000 Machine hours. Compute the amount of overhead cost that would be applied for the year

2. Compute the amount of under applied or over applied overhead for the year.