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 $$814,000$ of total manufacturing overhead for an

estimated actlvity level of $74,000$ machine$-$hours.

During the year, a large quantity of furniture on the market resulted in cutting back production and a bulldup of

furniture in the company's warehouse. The company's cost records revealed the following actual cost and

operating data for the year:

Requlred:

Compute the underapplied or overapplied overhead.

Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the

approprlate journal entry.

Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in

Process, Finished Goods, and Cost of Goods Sold. Prepare the approprlate Journal entry.

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 beling closed to Cost of Goods Sold?