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.

What is the significance of this over- or under-applied amount of overhead?