The company you work for uses machine hours as an allocation base to allocate overhead to jobs. You also collect the following information:

Estimated use

47,500

m-h

Practical capacity

50,000

m-h

Actual usage

46,850

m-h

Fixed manufacturing overhead*

$ 1,258,400

*All manufacturing overhead is fixed

Machine hours required for Job X

55

m-h

1) Using estimated amount of the allocation base, calculate:

a) predetermined overhead rate

b) overhead would be applied to Job X

c) underapplied or overapplied overhead

2) Using practical capacity amount of the allocation base, calculate:

a) predetermined overhead rate

b) overhead would be applied to Job X

c) underapplied or overapplied overhead

3) Explain why underapplied/overapplied overhead is different under the two methods.