Medusa Products uses a job-order costing system. Overhead costs are applied to jobs on the basis of machine-hours. At the beginning of the year, management estimated that the company would work 85,600 machine-hours and incur $196,880 in manufacturing overhead costs for the year.
1. Compute the company's predetermined overhead rate. (Round your answer to 2 decimal places.)
2. Assume that during the year the company actually worked only 80,300 machine-hours and incurred $194,000 of manufacturing overhead costs. Compute the amount of underapplied or overapplied overhead for the year. (Round your intermediate calculation to 2 decimal places.)