Refer to the information in Exercise 7-31. Prepare an entry to allocate the over- or underapplied overhead. Overhead applied in each of the inventory
accounts is as follows.
Work-in-process inventory .........$ 451,000
Finished goods inventory .........$1,066,000
Cost of goods sold .....................$6,683,000

Exercise 7-31

Yarra Fabrication estimates that its manufacturing overhead will be $2,240,000 in year 1. It further estimates that direct material costs will amount to $1,400,000. During July, Yarra worked on four jobs with actual direct materials costs of $60,000 for Job 0701, $40,000 for Job 0702, $55,000 for Job 0703, and $35,000 for Job 0704. Actual manufacturing overhead costs for the year were $2,400,000. Actual direct materials costs were $1,550,000. Manufacturing overhead is applied to jobs based on direct materials cost using predetermined rates.