A Company uses a job order costing system On January 1, the beginning of the current year, the companys inventory balances were as follows Raw materials $ 22,500 Work in process $ 12,600 Finished goods $ 31,300 The company applies overhead cost to jobs on the basis of machine hours For the current year, the company estimated that it would work 37,300 machine hours and incur $154,795 in manufacturing overhead cost The following transactions were recorded for the year Raw materials were purchased on account $226,000 Raw materials were requisitioned for use in production $203,000 (85 direct and 15 indirect) The following costs were incurred for employee services Direct labour $ 170,400 Indirect labour $ 29,600 Sales commissions $ 39,900 Administrative salaries $ 85,200 Heat, power, and water costs were incurred in the factory $47,850 Prepaid insurance expired during the year $16,500 (80 relates to factory operations, and 20 relates to selling and administrative activities) Advertising costs were incurred, $56,500 Depreciation was recorded for the year $67,800 (75 relates to factory operations, and 25 relates to selling and administrative activities) Manufacturing overhead cost was applied to production The company recorded 42,600 machine hours for the year Goods that cost $516,400 to manufacture according to their job cost sheets were transferred to the finished goods warehouse Sales for the year totalled $760,400 and were all on account The total cost to manufacture these goods according to their job cost sheets was $508,800 2 Prepare T accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold Post relevant data from your journal entries to these T accounts (dont forget to enter the opening balances in your inventory accounts) Compute an ending balance in each account 3 a Is manufacturing overhead underapplied or overapplied for the year multiple choice Underapplied overhead Overapplied overhead 3 b Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account ( Do not round intermediate calculations and round your final answers to 2 decimal places If no entry is required for a transaction event, select No journal entry required in the first account field ) 4 Prepare an income statement for the year (Do not round intermediate calculations and round your final answers to nearest whole dollar amount )

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A Company uses a job-order costing system. On January 1, the beginning of the current year, the companys inventory balances were as follows: Raw materials

A Company uses a job-order costing system. On January 1, the beginning of the current year, the companys inventory balances were as follows:


Raw materials	$	22,500
Work in process	$	12,600
Finished goods	$	31,300

The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 37,300 machine-hours and incur $154,795 in manufacturing overhead cost. The following transactions were recorded for the year:

Raw materials were purchased on account: $226,000.
Raw materials were requisitioned for use in production: $203,000 (85% direct and 15% indirect).
The following costs were incurred for employee services:


Direct labour	$	170,400
Indirect labour	$	29,600
Sales commissions	$	39,900
Administrative salaries	$	85,200

Heat, power, and water costs were incurred in the factory: $47,850.
Prepaid insurance expired during the year: $16,500 (80% relates to factory operations, and 20% relates to selling and administrative activities).
Advertising costs were incurred, $56,500.
Depreciation was recorded for the year: $67,800 (75% relates to factory operations, and 25% relates to selling and administrative activities).
Manufacturing overhead cost was applied to production. The company recorded 42,600 machine-hours for the year.
Goods that cost $516,400 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.
Sales for the year totalled $760,400 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $508,800.

2. Prepare T-accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (dont forget to enter the opening balances in your inventory accounts). Compute an ending balance in each account.

3-a. Is manufacturing overhead underapplied or overapplied for the year?

multiple choice

Underapplied overhead
Overapplied overhead

3-b. Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account. (Do not round intermediate calculations and round your final answers to 2 decimal places. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

4. Prepare an income statement for the year. (Do not round intermediate calculations and round your final answers to nearest whole dollar amount.)