The following cost data relate to the office overhead costs of the Starlight Tax Preparation Company during the just completed year:
Overhead costs incurred:
Office rent........ $ 25,000
Office supplies.......$ 6,000
Utilities, office.......$ 15,000
Salary, office manager....$ 55,000
Salary, receptionist.....$ 35,000
Depreciation office equipment.$ 10,000
Software licensing fees...$ 24,000
Other miscellaneous expenses.$ 30,000
Total overhead costs..... $ 200,000
The company uses a predetermined overhead rate to apply overhead cost to each tax job. The rate for the year was $6 per tax prepare hour. A total of 35,000 tax prepare hours was recorded for the year.
Required:
Compute the amount of under or over applied overhead cost for the year.