Closing Manufacturing Overhead: Two Approaches. Placer

Company incurred actual manufacturing overhead costs of

$260,000 during the year ended December 31, 2012. A total of

$350,000 in overhead was applied to jobs. At December 31, 2012,

work-in-process inventory totals $100,000, and finished goods

inventory totals $300,000. Cost of goods sold before adjustments

totals $600,000 for the year.

Required:

1. Is overhead underapplied or overapplied?

2. Close the manufacturing overhead account,

assuming the balance is immaterial.

3. Close the manufacturing overhead account,

assuming the amount is material.