1. Harwood Company uses a job-order costing system that applies overhead cost to jobs on the basis of machine-hours. The company's predetermined overhead rate of $2.60 per machine-hour was based on a cost formula that estimates $257,400 of total manufacturing overhead for an estimated activity level of 99,000 machine-hours.

Required:

1. Assume that during the year the company works only 94,000 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 underapplied or overapplied overhead for the year and show the balance in your Manufacturing Overhead T-account.

2B. Prepare a journal entry to close the company's underapplied or overapplied overhead to Cost of Goods Sold.

2.

The following cost data relate to the manufacturing activities of Chang Company during the just completed year:

Manufacturing overhead costs incurred:
Indirect materials	$ 15,900
Indirect labor	139,000
Property taxes, factory	8,900
Utilities, factory	79,000
Depreciation, factory	150,300
Insurance, factory	10,900
Total actual manufacturing overhead costs incurred	$ 404,000
Other costs incurred:
Purchases of raw materials (both direct and indirect)	$ 409,000
Direct labor cost	$ 69,000
Inventories:
Raw materials, beginning	$ 20,900
Raw materials, ending	$ 30,900
Work in process, beginning	$ 40,900
Work in process, ending	$ 70,900

The company uses a predetermined overhead rate of $20 per machine-hour to apply overhead cost to jobs. A total of 20,600 machine-hours were used during the year.

Required:

1. Compute the amount of underapplied or overapplied overhead cost for the year.

2. Prepare a schedule of cost of goods manufactured for the year.