Moody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:

Machine-hours required to support estimated production		158,000
Fixed manufacturing overhead cost	$	654,000
Variable manufacturing overhead cost per machine-hour	$	5.00

Required:

1.	Compute the predetermined overhead rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

2.	During the year, Job 400 was started and completed. The following information was available with respect to this job:

Direct materials requisitioned	$	390
Direct labor cost	$	270
Machine-hours used		37

	Compute the total manufacturing cost assigned to Job 400. (Do not round intermediate calculations and round final answer to 2 decimal places.)

3-a.	During the year the company worked a total of 145,700 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,338,198. What is the amount of underapplied or overapplied overhead for the year? (Use the overhead rate determined in requirement 1.)

3-b.

If this amount were closed out entirely to Cost of Goods Sold, would net operating income increase or decrease?

	Increase
	Decrease