Accounting for underapplied and overapplied overhead Jefferson Ceramics Company man- ufactures a variety of products in a single manufacturing plant. Manufacturing overhead is applied to products at the rate of 150 percent of direct labor cost. At the end of the year the Manufacturing Overhead Control account has a debit balance of $620,000. The company assigns any underapplied or overapplied overhead to Cost of Goods Sold unless applied overhead is more than 20 percent different from actual overhead. In such cases the difference is assigned to Work in Process, Finished Goods, and Cost of Goods Sold in proportion to the amount of applied overhead that still remains in each account at year end. Below is a listing of the amount of applied overhead that remained in each account at the end of the accounting year.

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REQUIRED Work in Process Finished Goods Cost of Goods Sold Total Applied Overhead. a. Calculate the total underapplied or overapplied overhead for the year. $ 45,000 90,000 315,000 $450,000 b. Calculate the distribution of underapplied or overapplied overhead and record the distribu- tion. c. Calculate the ending balance of applied overhead in work in process, finished goods, and cost of goods sold.