XYZ Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $15,500 and 2,500 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $21,000. The actual labor rate is $7.50 and the company paid a total of $21,750 for its actual direct labor usage.

The predetermined overhead rate for the year was

The applied manufacturing overhead for the year was closest to:

Was the overhead underapplied or overapplied? By how much?

Prepare journal entry to eliminate the underapplied or overapplied to Cost of Goods Sold account.