Hamilton Company applies manufacturing overhead costs to products based on direct labor hours. The company estimates manufacturing overhead cost for the year to be $274,000 and direct labor hours to be 20,000. Actual overhead and actual direct labor hours for the year were $320,000 and 24,400 hours, respectively.


Required:

a. Compute over- or underapplied overhead.

b. Which accounts will be affected by the over- or underapplied manufacturing overhead?