The following calendar year information about the Tahoma Corporation is available on December 31:

Advertisng Expense: $28,800

Depreciation of factory equipment: 42,320

Depreciation of office equipment: 10,800

Direct Labor: 142,600

Factory Utilities: 35,650

Interest Expense: 6,650

Inventories, January 1: Raw Materials: 3,450 Goods in process: 17,250 Finished Goods: 35,650 Inventories, December 31 Raw materials: 2,300 Goods in Process: 20,700 Finished Goods: 31,050 Raw Materials Purchases: 132,450 Rent on factory building: 41,400 Indirect Labor:51,750 Sales Commissions: 16,500

The company applies overhead on the basis of 125% of direct labor costs. 1.

Calculate the amount of over- or under-applied overhead.

CONCENTRATE ON THIS QUESTION PLEASE: What is the significance of this over- or under-applied amount of overhead?