hardwood company uses a job order costing system that applies overhead cost to jobs on the basis of machine hours. The companys predetermined overhead rate of $2.50 Per machine hour was based on the cost formula that estimates $237,500 of total manufacturing overhead for an estimated activity level of 95,000 machine hours.

1.

Manufacturing Overhead

Maintenance 36,000 ??? (a)

Indirect Materials 9,500

Indirect Labor 75,000

Utilities 44,000

Insurance 8,500

Depreciation 56,000

Balance: ???

Work in Process:

Direct Materials 860,000

Direct Labor 105,000

Overhead (a) ????

Required:

1. Assume that during the year the company works only 90,000 machine hours and incurs the following costs in the manufacturing overhead and work in process accounts: compute the amount of overhead cost that would be applied to work in process for the year and make the entry in your T accounts.

2a. Compute the amount of under applied or overapplied overhead for the year and show the balance in your manufacturing overhead T account.

2b. Prepare a journal entry to close the companies under applied or overapplied overhead cost of goods sold.