Exercise 13-17 (Algo) Manufacturing overheadover/underapplied LO 13-5, 13-6

Janson Incorporated produces pickup truck bumpers. Overhead is applied on the basis of machine hours required for cutting and fabricating. A predetermined overhead application rate of $10.00 per machine hour was established for 2022.

Required:

If 9,200 machine hours were expected to be used during 2022, how much overhead was expected to be incurred?

Actual overhead incurred during 2022 totaled $122,050, and 10,100 machine hours were used during 2022. Calculate the amount of overapplied or underapplied overhead for 2022.

Note: Input the amount as positive value.

Whether the overapplied or underapplied overhead for the year is normally transferred to cost of goods sold in the income statement?