1. Boeing Company manufactures batteries and uses job - order costing system. For the current year, the manager of the company estimated that the company would need 80,000 machine hours and incur a fixed manufacturing overheard cost $325,000 and a variable manufacturing overhead cost of $7.5 per machine hour. Boeing Company had beginning inventory as follows : Raw Material $14,000 WIP $12,400 Finished Goods $20,000 The following information relates to operation in the current year. The raw materials purchased include both direct and indirect materials. Assume that all transactions were on account. Purchase of Raw Materials $1516,000 (70 % Direct and 30% Indirect) Raw material requisitioned for the use in production Direct : $1070,000 . Indirect : $230,000 Labor cost Direct : $33.5 per hr. Indirect : $18 per HR Salary for office employees $40,000 Deprecation on Factory Building $220,000 Depreciation on Corporate Building $180,000 Utility cost $100,000 (65% relates to factory and the rest relates to corporate) Page 1 of 4 Factory Machinery Maintenance Cost $15,000 Advertising Expense $20,000 Rent $200,000 (70% relates to factory and the rest relates to corporate) Additional Information: - The direct labors worked a total of 9,300 hours. The indirect labors worked for a total of 11,300 hours. - Manufacturing overhead was applied to production. The company received lesser than expected orders during the year for which the machines ran for a total of 70,000 hours. - During the year, a total of 46,000 units of batteries were manufactured and transferred to finished goods , out of which 43,000 were sold to customers at the selling price of $70 per battery. Required :

a. Use the information given above to write the appropriate journal entries for Boeing Company. (20 marks)

b. Calculate whether the manufacturing overhead was over applied or under applied. Write the appropriate journal entry to record the over/under application. (5 marks)