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 following estimates were used in preparing the predetermined overhead rate at the beginning of the year:

Machine-hours		75,000
Fixed manufacturing overhead cost	$	795,000
Variable manufacturing overhead per computer-hour	$	1.40

During the year, a glut of furniture on the market resulted in cutting back production and a buildup of furniture in the companys warehouse. The companys cost records revealed the following actual cost and operating data for the year:

Machine-hours		60,000
Manufacturing overhead cost	$	850,000
Compute the companys predetermined overhead rate for the year. Compute the underapplied or overapplied overhead for the year. Assume the company closes any underapplied or overapplied overhead directly to Cost of Goods Sold. Prepare the appropriate entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Event General Journal Debit Credit