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 $1,040,000 of total manufacturing overhead for an estimated activity level of 80,000 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 Spoed 71.000 990.000 Machinebours Manufacturing overhead con Inventaries a year and Raw materials Work in proces includes overbeadsplied Finished goods ineludes overhead appliedot 107 $73, Cestf goods sold includes the appliedot s 11,000 156000 312.000 152.000 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 wil net operating income befthe 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? Complete this question by entering your answers in the tabs below. Regedi Recured 2 Rered) Required Compute the under applied or overapplied overhead. Required 1 Required 2 Required 3 Required 4 Assume that the company closes any underapplied or overapplied overhead to 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 field.) View transaction list Journal entry worksheet Record the entry to close the balance in the manufacturing overhead account to the cost of goods sold account. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal $ 71,000 990,000 Machine-hours Manufacturing overhead COSE Inventories at year-end: Raw materials Work in process (includes overhead applied of $73,840) Finished goods includes overhead applied of $147, 680) Coat of goods sold (includes overhead applied of $701, 480) $ 11,000 $ 156,000 $ 312.000 $1,482,000 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 overapplied 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 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 if the overhead is allocated rather than closed antirely to cost of goods sold.
