Longhorn Technologies has the following year-end balances in its three inventory accounts and cost of goods sold. Longhorn also informs you that actual overhead for the year was $692,415. Net income, prior to any adjustment for under- or overapplied overhead, is $122,342 for the year.

Required:
a. What is Longhorn's under- or overapplied overhead for the year?
b. Suppose Longhorn writes off under- or overapplied overhead directly to cost of goods sold. After the write-off, what is Longhorn's net income for the year?
c. Suppose Longhorn prorates under- or overapplied overhead among the accounts that contain overhead using their unadjusted year-end balances. After proration, what is Longhorn's net income for the year?
d. Suppose Longhorn prorates the under- or overapplied overhead among the accounts that contain overhead using the amount of overhead applied to each account. After this procedure, what is Longhorn's net income for the year?
e. Briefly discuss why your answers to parts (b)-(d) differ.

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Work in MaterialsProcess Cost of Goods Sold Raw Finished Goods Unadjusted year-end balance $75,535.00 $148,516.50 $215,274.75 $1,076,978.75 Amount of applied overhead included in each account 61,183.35 95,174.10 523,457.55