1.(20 points)Vandelay Industries makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year:

Machine-hours

88,000

Fixed manufacturing overhead cost

$

1,273,000

Variable manufacturing overhead per machine-hour

$

3.30

During the year, a glut of furniture on the market resulted in cutting back production and a buildup of furniture in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year:

Machine-hours

60,000

Manufacturing overhead cost

$

942,000

Inventories at year-end:

Raw materials

$

420,000

Work in process (includes overhead applied of 53,310)

$

110,000

Finished goods (includes overhead applied of 248,780)

$

1,050,000

Cost of goods sold (includes overhead applied of 586,410)

$

2,710,000

A.Compute the Company's predetermined overhead rate for the year. (HINT use your mixed cost formula to calculate total estimated overhead)

The answer is 17.76

B.How much manufacturing overhead was allocated during the current year?

The answer is 1,065,600

C.Compute the underallocated or overallocated overhead for the year.

The answer is -123,600 overallocated

D.Record the Journal Entry to close out the underallocated or overallocated manufacturing overhead.