Osborn Manufacturing uses a predetermined overhead rate of $19.60 per direct labor-hour. This predetermined rate was based on a cost formula that estimates $262,640 of total manufacturing overhead for an estimated activity level of 13,400 direct labor-hours. The company actually incurred $255,000 of manufacturing overhead and 12,900 direct labor-hours during the period. Required: 1. Determine the amount of underapplied or overapplied manufacturing overhead for the period. 2. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the journal entry to dispose of the underapplied or overapplied overhead increase or decrease the company's gross margin? By how much? by 1. Manufacturing overhead 2. The gross margin would underapplied decrease by Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system that applies manufacturing overhead cost to jobs on the basis of direct labor- hours. Its predetermined overhead rate was based on a cost formula that estimated $380,000 of manufacturing overhead for an estimated allocation base of 1,000 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $220,000. b. Raw materials used in production (all direct materials), $205,000. c. Utility bills incurred on account, $63,000 (90% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (1,075 hours) Indirect labor Selling and administrative salaries $ 250,000 $ 94,000 $ 130,000 e. Maintenance costs incurred on account in the factory, $58,000 f. Advertising costs incurred on account, $140,000 g. Depreciation was recorded for the year, $88,000 (85% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $113,000 (90% related to factory facilities, and the remainder related to selling and administrative facilities). i. Manufacturing overhead cost was applied to jobs, $_? j. Cost of goods manufactured for the year. $810,000. k. Sales for the year (all on account) totaled $1,400,000. These goods cost $840,000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the year were: Raw Materials Work in Process Finished Goods $ 34,000 $ 25,000 $ 64,000 Required: 1. Prepare journal entries to record the preceding transactions. 2. Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above.) 3. Prepare a schedule of cost of goods manufactured. 4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 48. Prepare a schedule of cost of goods sold. 5. Prepare an income statement for the year. Complete this question by entering your answers in the tabs below. Reg 1 Req 2 Req 3 Req 4A Req 4B Req5 Prepare journal entries to record the preceding transactions. (If no entry is required for a transaction/event, select "No journal entry . " required" in the first account field.) View transaction list View journal entry worksheet X No Transaction Debit Credit General Journal No Transaction Recorded 1 Req Req 2 > Complete this question by entering your answers in the tabs below. Req1 Reg 2 Req3 Req 4A Req 4B Req 5 ..................... Post your entries.to. T-accounts. (Don't forget to enter the beginning inventory. balances above. ***** Accounts Receivable Sales Beg Bal Beg. Bal End. Bal. End. Bal. Raw Materials Cost of Goods Sold Beg. Bal. Beg. Bal. End. Bal. End. Bal. Work in Process Manufacturing Overhead Beg. Bal. Beg. Bal. End, Bal. End. Bai Finished Goods Advertising Expense Beq. Bal. Beg. Bal End. Bal. End, Bal Accumulated Depreciation Utilities Expense Beg. Bal Beg. Bal End. Bal. End. Bal Accounts Payable Salaries Expense Beg. Bal Beg. Bal End. Bal. End. Bal. Depreciation Expense Salaries & Wages Payable Beg. Bal Beg. Bal End. Bal. End. Ball Rent Expense Beg. Bat End. Bal Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Req 4A Req 4B Reg 5 Prepare a schedule of cost of goods manufactured. Froya Fabrikker A/S Schedule of Cost of Goods Manufactured Direct materials: Total raw materials available Direct materials used in production Total manufacturing costs added to production Total manufacturing costs to account for 0 Cost of goods manufactured Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Req 4A Req 4B Reg 5 Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Req 4B Reg 5 Prepare a schedule of cost of goods sold. Froya Fabrikker A/S Schedule of Cost of Goods Sold Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Req 4B Reg 5 Prepare an income statement for the year. Froya Fabrikker A/S Income Statement For the Year Ended 0 Selling and administrative expenses: 0 $ 0