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Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applie

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Answer #1
Actual machine hours 74000
X Predetermined overhead rate 7 =651000/93000
Overhead applied 518000
1
Manufacturing overhead cost 618000
Less: Overhead applied 518000
Underapplied overhead 100000
2
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Cost of goods sold 100000
        Manufacturing overhead 100000
3
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Work in Process 8000 =100000/518000*41440
Finished goods 19000 =100000/518000*98420
Cost of goods sold 73000 =100000/518000*378140
        Manufacturing overhead 100000
4
Net operating income will be $27000 greater if the underapplied overhead (100000-73000)
is allocated rather than closed entirely to cost of goods sold
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