Russell Lumber Company uses an actual costing system. The company's controller has been wondering what would be the ef- fect of using a normal costing system to assign overhead. She has determined that un- der the normal costing approach the predetermined overhead rate would be calculated based on machine hours. Russell Lumber Co. expects to use 50,000 machine hours during the year. Overhead is expected to be approximately $750,000 for the year. The company used 4,500 machine hours during March. Russell Lumber reported the fol- lowing events:

(a) Raw lumber was purchased for \(\$ 110,000\).

(b) \(\$ 100,000\) in raw lumber was used in production.

(c) \(\$ 40,000\) in direct labor was incurred.

(d) \(\$ 60,000\) in overhead was incurred.
Required Compute the work-in-process inventory using both actual and normal costing for the month of March. Explain why the numbers are different. Assume all of the products produced in March were sold in that month. What would be the amount of the adjustment to the cost of goods sold account for the overapplied or underapplied overhead? Would cost of goods sold increase or decrease as a result of this adjustment? Why?