Question

Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applie
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the un
Required 1 Required 2 Required 3 Required 4 Assume that the company closes any underapplied or overapplied overhead to Cost o
Required 1 Required 2 Required 3 Required 4 Assume that the company allocates any underapplied or overapplied overhead propor
Required 1 Required 2 Required 3 Required 4 How much higher or lower will net operating income be if the underapplied or over
0 0
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Answer #1
Actual machine hours 77000
X Predetermined overhead rate 19 =1615000/85000
Overhead applied 1463000
1
Manufacturing overhead cost 1574000
Less: Overhead applied 1463000
Underapplied overhead 111000
2
General Journal Debit Credit
Cost of goods sold 111000
        Manufacturing overhead 111000
3
General Journal Debit Credit
Work in Process 5550 =111000*73150/1463000
Finished goods 21090 =111000*277970/1463000
Cost of goods sold 84360 =111000*1111880/1463000
        Manufacturing overhead 111000
4
Net operating income will be $26640 greater if the underapplied overhead (110000-84360)
is allocated rather than closed entirely to cost of goods sold
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