Problem 3.12 (Statlc) PredetermIned Overhead Rate; Dlsposing of Underapplled or Overapplled Overhead [LO3.4] Luzadls Company makes furnlture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basls of machine-hours. The predetermined overhead rate was based on a cost formula that estlmates $900,000 of total manufacturing overhead for an estimated actlvity level of 75,000 machine-hours. Durling the year, a large quantity of furniture on the market resulted In cutting back production and a bulldup of furniture In the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year: 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 approprlate journal entry. 3. Assume that the company allocates any underapplied or overapplied overhead proportlonally to Work In Process, Finished Goods, and Cost of Goods Sold. Prepare the approprlate Journal entry. 4. How much higher or lower will net operating Income be If the underapplied or overapplied overhead is allocated to Work in Process Finlshed Goods, and Cost of Goods Sold rather than belng closed to Cost of Goods Sold? Complete this question by entering your answers in the tabs below. Compute the underapplied or overapplied overhead