Question

opel TCC WIR Saved 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 $900,000 of total manufacturing overhead for an estimated activity level of 75.000 machine-hours pents 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 years Book References 60,00 50,000 Machine-hours Manufacturing overhead cost Inventories at year and waterials work in process (includes overhead applied of $36.000) Finished goods (includes overhead applied of $180,000) Cost of goods sold includes overhead applied of $504,000) 30,000 100,00 500,000 $ 1,400,000 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 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 overapplied overhead is allocated to Work in Process 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. Record 1 Required 2 R ed u re

please do all 4 parts of required because it is all 1 question.

Answer 1

1	a.	Total manufacturing overhead	$900,000
	b.	Machine hours	75000
	c.	Predetermined manufactured overhead(a)/(b)	$12
	d.	Total actual machine hours	60,000
	e.	Manufacturing overhead allocated( c)*(d)	$720,000
	f.	Actual manufacturing overhead	$850,000
	g.	Under applied overheads(f)-(e )	$130,000
2		Account titles and explanation	Debit	Credit
		Cost of goods sold	$130,000
		Manufacturing overhead		$130,000
		(Manufacturing overhead transferred to COGS)
3		Account titles and explanation	Debit	Credit
		Work-in-process	$6,500		(130,000/720,000*36,000)
		Finished Goods	$32,500		(130,000/720,000*180,000)
		Cost of goods sold	$91,000		(130,000/720,000*504,000)
		Manufacturing overhead		$130,000
4		Net income will be 39,000 higher if the manufacturing overhead is allocated rather than closed entirly to Cost of goods sold
		(130,000-91,000)

* If you face any difficulty please let me know in the comment section. I'll figure it out. Please give your valuable feedback if you are satisfied.