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Medusa Products is a manufacturing company that operates a job-order costing system.Overhead costs are applied to jobs on the basis of machine-hours.At the beginning of

Medusa Products is a manufacturing company that operates a job-order costing system.Overhead costs are applied to jobs on the basis of machine-hours.At the beginning of the year, management estimated that the company would incur $170,000 in manufacturing overhead costs for the year and work 85,000 machine hours.Assume that during the year the company actually works only 80,000 machine-hours and incurs the following costs in the Manufacturing Overhead and Work in process accounts:

Manufacturing

Overhead

Work in

Process

(Utilities)

14,000

(a)?

(Direct materials)

530,000

(Insurance)

9,000

(Direct labor)

85,000

(Maintenance)

33,000

(Overhead)(a)

?

(Indirect materials)

7,000

(Indirect labor)

65,000

(Depreciation)

40,000

What is the amount of under- or over-applied overhead for the year that will be transferred into Cost of Goods Sold?:

A. $85,000

B. $10,000

C. $5,000

D. $8,000

E.$2,000

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