1. **State the problem:** Valley Corporation uses direct labor hours to calculate its predetermined overhead rate. We need to find the predetermined overhead rate and then apply it to actual direct labor hours to find applied overhead. 2. **Calculate the predetermined overhead rate:** The formula is: $$\text{Predetermined Overhead Rate} = \frac{\text{Estimated Total Manufacturing Overhead}}{\text{Estimated Direct Labor Hours}}$$ Given: Estimated Total Manufacturing Overhead = 341,890 Estimated Direct Labor Hours = 17,900 Calculate: $$\text{Predetermined Overhead Rate} = \frac{341,890}{17,900} = 19.09$$ So, the predetermined overhead rate is 19.09 per direct labor hour. 3. **Calculate applied manufacturing overhead:** Applied overhead is calculated by multiplying the predetermined overhead rate by the actual direct labor hours: $$\text{Applied Overhead} = \text{Predetermined Overhead Rate} \times \text{Actual Direct Labor Hours}$$ Given actual direct labor hours = 16,700 Calculate: $$\text{Applied Overhead} = 19.09 \times 16,700 = 318,703$$ 4. **Compare applied overhead to actual overhead:** Actual manufacturing overhead = 336,890 Applied manufacturing overhead = 318,703 5. **Calculate overapplied or underapplied overhead:** $$\text{Overapplied/Underapplied Overhead} = \text{Applied Overhead} - \text{Actual Overhead} = 318,703 - 336,890 = -18,187$$ Since the result is negative, overhead is underapplied by 18,187. **Final answers:** - Predetermined overhead rate = 19.09 per direct labor hour - Applied overhead = 318,703 - Underapplied overhead = 18,187