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hardwood company uses a job order costing system that appliesoverhead cost to jobs on the basis of machine hours. The companyspredetermined overhead rate of $2.50 Per machine hour was based onthe cost formula that estimates $237,500 of total manufacturingoverhead for an estimated activity level of 95,000 machinehours.

1.

Manufacturing Overhead

Maintenance                         36,000                       ???               (a)

IndirectMaterials                   9,500

IndirectLabor                        75,000

Utilities                                   44,000

Insurance                               8,500

Depreciation                           56,000

Balance:                                   ???        

Work in Process:

DirectMaterials             860,000

DirectLabor                  105,000

Overhead(a)                   ????

Required:

1. Assume that during the year the company works only 90,000machine hours and incurs the following costs in the manufacturingoverhead and work in process accounts: compute the amount ofoverhead cost that would be applied to work in process for the yearand make the entry in your T accounts.

2a. Compute the amount of under applied or overapplied overheadfor the year and show the balance in your manufacturing overhead Taccount.

2b. Prepare a journal entry to close the companies under appliedor overapplied overhead cost of goods sold.