$7-31.$ Predetermined Overhead Rates

Yarra Fabrication estimates that its manufacturing overhead will be $$2,240,000$ in year $1.$ It further estimates that direct material costs will amount to $$1,400,000.$ During July, Yarra worked on four jobs with actual direct materials costs of $$60,000$ for Job $0701,$$$40,000$ for Job $0702,$$$55,000$ for Job $0703,$ and $$35,000$ for Job $0704.$ Actual manufacturing overhead costs for the year were $$2,400,000.$ Actual direct materials costs were $$1,550,000.$ Manufacturing overhead is applied to jobs based on direct materials cost using predetermined rates.

Required

a$.$ How much overhead was applied to each of the four jobs, $0701,0702,0703,$ and $0704?$

b$.$ What was the over$-$ or underapplied manufacturing overhead for year $1?$

$7-32.$ Prorate Over$-$ or Underapplied Overhead

Refer to the information in Exercise $7-31.$ Prepare an entry to allocate the over$-$ or underapplied overhead. Overhead applied in each of the inventory accounts is as follows.

Work$-$in$-$process inventory

Finished goods inventory

$$451,000$

$$1,066,000$

$$6\mathrm{.}683,000$