Vaughn Manufacturing Company, a small manufacturer of appliance parts, has just completed its first year of operations. The company's controller, Thomas Taylor, has been reviewing the results for the year and is concerned about the application of factory overhead. Trainor is using the following information to assess operations. Vaughn uses several machines with a combined cost of $2,280.000 and no residual value. Each machine has an output of 5 units of product per hour and a useful life of 28.000 machine hours. Selected actual data on Vaughn's operations for the year just ended are as follows: Products manufactured Machine use Direct labor Labor rate Total factory overhead Cast of Gaads Sald Finished Goods Inventory year-end) Work in Process Inventory (year-end) 683,000 units 162,000 hours 26.000 hours $ 15 per hour $ 1,180,000 $ 1,739,860 $ 448.240 $ 0 Total factory overhead is applied based on direct labor cost using a predetermined plantwide rate. Budgeted activity for the year included 10 employees each working 1.800 productive hours per year to produce 562,500 units of product. Because the machines are highly automated, each employee can operate two to four machines simultaneously. Normal activity is for each employee to operate three machines. Machine operators are paid $15 per hour. Overhead was budgeted at $810,000. Thomas Taylor believes that Vaughn Manufacturing Company should apply manufacturing overhead based on machine hours. Calculate the predetermined overhead rate using that activity base. (Round OH rate to 2 decimal places, eg. 52.75.) Predetermined overhead rale $ 7.2 / machine hour c Textbook and Media Solution Attempts: 3 of 3 used (d) If Vaughn Manufacturing Company had used machine hours as its application base.would manufacturing overhead have been underapplied or overapplied? By how much? (Round answer to O decimal places, eg. 5,275.) Overhead Underapplied by $