The production manager of Info Tech (Pty) Ltd has recently attended a management course where the advantages of variance analysis were discussed. He feels such an analysis would assist in solving problems of budgetary control that arose during the year. The following information relates to the past years (year ending 31 May 2022) activities:

Actual manufacturing overheads - N$175 000.00

Actual direct labour hours - 25 000 hours

Budgeted manufacturing overheads - N$125 000.00

Actual sales - N$600 000.00

Budgeted direct labour hours - 20 000 hours

Actual profit for the year - N$185 000.00

Questions

a) Calculate the predetermined overhead rate.

b) Calculate overheads over- or under-absorbed.