Marzel Inc. 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 $520,000 of total manufacturing overhead for an estimated activity level of 65,000 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 companys warehouse. The companys cost records revealed the following actual cost and operating data for the year.

Compute the underapplied or overapplied overhead. Record the entry to close the balance in the manufacturing overhead account to the cost of goods sold account. ote: Enter debits before credits. Event General Journal Debit Credit 1 Record the allocation of the underapplied/overapplied overhead to various accounts. Note: Enter debits before credits. Event General Journal Debit Credit 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 entirely to cost of goods sold. Compute the underapplied or overapplied overhead. Record the entry to close the balance in the manufacturing overhead account to the cost of goods sold account. ote: Enter debits before credits. Event General Journal Debit Credit 1 Record the allocation of the underapplied/overapplied overhead to various accounts. Note: Enter debits before credits. Event General Journal Debit Credit 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 entirely to cost of goods sold