Savallas Company is highly automated and uses computers to control manufacturing operations. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of computer-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year:
During the year, a severe economic recession resulted in cutting back production and a buildup of inventory in the companys warehouse. The companys cost records revealed the following actual cost and operating data for the year:
Required:
Assume that the company allocates any underapplied or overapplied overhead to Work in Pro-
cess, Finished Goods, and Cost of Goods Sold on the basis of the amount of overhead applied during the year that remains in each account at the end of the year. These amounts are $43,200 for Work in Process, $280,800 for Finished Goods, and $756,000 for Cost of Goods Sold. Prepare the journal entry to show the allocation.