Luzadis Company makes forniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $980,000 of total manufacturing overhead for an estimated activity level of 98,000 machine-hours. During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year. Machine-hours Manufacturing overhead cost Inventories at year-endi Raw materials Work in process (includes overhead applied of $39,000) Finished goods (includes overhead applied of $117,000) Cost of goods sold (includes overhead applied of $624,000) Required: 1. Compute the underapplied or overapplied overhead. 78,000 $941,000 $15,000 $ 97,500 $ 292,500 $1,560,000 2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry. 3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry 4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process. Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold? Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials): Selling expenses Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead coat, Inventory balances at the beginning and end of the year were as follows: $ 213,000 $266,000 2 $156,000 $ 373,000 $355,000 Rav materials Work in process Finished goods Beginning $57.000 Ending $ 38,000 $23,000 $ 35,000 The total manufacturing costs added to production for the year were $685,000, the cost of goods available for sale totaled $735,000; the unadjusted cost of goods sold totaled $667,000; and the net operating income was $39,000. The company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Required: Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement. (Hint: Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.) Complete thir questi Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials): Selling expenses Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost, Inventory balances at the beginning and end of the year were as follows: $140,000 $ 290,000 $100,000 $205,000 270,000 Raw materials Work in process Finished goods Deginning $40,000 7 Ending $10,000 $ 35,000 $50,000 7 The total manufacturing costs added to production for the year were $683,000; the cost of goods available for sale totaled $740,000, the unadjusted cost of goods sold totaled $660,000; and the net operating income was $30,000. The company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Required: Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement. (Hint Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.)