Calculating under or overapplied factory overhead

Question

Response to the following problem:

Factory overhead for the Sloan Company has been estimated as follows:

Nonvariable overhead                       $122,500

Variable overhead                            $90,000

Budgeted direct labor hours               42,500

Production for the month was 90 percent of the budget, and actual factory overhead totaled $175,000.

Calculate:

a. The predetermined factory overhead rate.

b. The under- or overapplied factory overhead.