7-30

Southern Rim Parts estimates its manufacturing overhead to be $306,000 and its direct labor costs to be $1,020,000 for year 1. The first three jobs that Southern Rim worked on had actual direct labor costs of $61,000 for Job 301, $86,000 for Job 302, and $155,000 for Job 303. For the year, actual manufacturing overhead was $419,000 and total direct labor cost was $838,000. Manufacturing overhead is applied to jobs on the basis of direct labor costs using predetermined rates.

Overhead applied in each of the inventory accounts is as follows:

Work-in-process inventory	$	25,140
Finished goods inventory		75,420
Cost of goods sold		150,840

Required:

Prepare an entry to prorate the under- or overapplied overhead.