Luzadis Company makes furniture 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 $1,152,000 of total manufacturing overhead for an estimated activity level of 72,000 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 cast and operating data for the year Machine-hours 55,000 Manufacturing overhead cont $ 1,102,000 Inventories at year-endt RAW materials $ 18,000 Work in process (includes overhead applied of $52,800) $ 114,600 Pinished goods includes overhead applied of $167,200) $362,900 Cont of goods sold (includes overhead applied of $660,000) $ 1,432,500 Required: 1. Compute the underapplied or overapplied overhead, 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 overspplied overhead is allocated to Work In Process, Finished Goods, and cost of Goods Sold rather than being closed to Cost of Goods Sold? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 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 (if no entry is required for a transaction/event, select "No journal entry required in the account feld Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 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. (If no entry is required for a transaction/event, select "No journal entry required in the first account held) View transaction list View Journal entry worksheet No Event Debit Credit 1 General Journal Work in process Finished goods Cost of goods sold Manufacturing overhead Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 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? Net operating income will be greater underapplied overhead is located rather than closed entirely to cost of goods sold. (Required 3 if the
