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 predetermined overhead rate was based on a cost formula that estimates $765,000 of total manufacturing overhead for an estimated activity fevel of 85.000 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 company's warehouse. The company's cost records revealed the following actual cost and operating data for the year $ 69,000 710,000 Machine-hour's Hanufacturing overhead cost Inventories at year and materials Work in process includes overhead applied of 562.100) Finished goods includes overhead applied of $105,570) Cost of goods sold includes overhead applied of $45), 130) $ 5 10,000 5 311,100 $ 1,335,000 Required: 1. Compute the underapplied or overapplied overhead, 2. Assume that the company closes any underapplied or overapplied overhead to cost of Goods Sold. Prepare the appropriate journal Entry 3. Assume that the company allocates any underapolled or overapplied overhead proportionally to Work in Process Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry 4. How much higher or lower wil 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 Check Finished goods (includes overhead applied of $185,570) Cost of goods sold (includes overhead applied of $453, 330) 5 311,100 $ 1,335,900 Required: 1 Compute the underapplied or overapplied overhead, 2 Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry 3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process. Finished Goods and Cost of Goods Sold Prepare the appropriate journal entry 4. How much higher or lower wil net operating income be if the underapplied or averapplied overhead is allocated to Work in Process Finished Goods and cost of Goods Sold rather than being closed to cost of Goods Sold? Journal entry worksheet 3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished and Cost of Goods Sold. Prepare the appropriate journal entry 4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 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 the overhead is allocated rather than closed entirely to cost of goods sold
