$3,4-4,4-5]4-46$ Cost Flows; Application of Overhead Mooresville Corporation manufactures reproductions of eighteenth$-$century, classical$-$style furniture. It uses a job costing system that applies factory overhead on the basis of direct labor hours. Budgeted factory overhead for the year was $$1,261,500,$ and management budgeted $87,000$ direct labor hours. Mooresville had no Materials, Workin$-$Process, or Finished Goods Inventory at the beginning of August. These transactions were recorded during August:

a$.$ Purchased $5,000$ square feet of oak on account at $$26$ per square foot.

b$.$ Purchased $50$ gallons of glue on account at $$36$ per gallon $($indirect material$).$

c$.$ Requisitioned $3,500$ square feet of oak and $31$ gallons of glue for production.

d$.$ Incurred and paid payroll costs of $$187,900.$ Of this amount, $$46,000$ were indirect labor costs; direct labor personnel earned $$22$ per hour.

e$.$ Paid factory utility bill, $$15,230$ in cash.

f$.$ August's insurance cost for the manufacturing property and equipment was $$3,500.$ The premium had been paid in March.

g$.$ Incurred $$8,500$ depreciation on manufacturing equipment for August.

h$.$ Recorded $$2,400$ depreciation on an administrative asset.

i$.$ Paid advertising expenses in cash, $$5,500.$

j$.$ Incurred and paid other factory overhead costs, $$13,500.$

k$.$ Incurred miscellaneous selling and administrative expenses, $$13,250.$

Applied factory overhead to production on the basis of direct labor hours.

m$.$ Froduced completed goods costing $$146,000$ during the month.

Saies on account in August were $$135,000.$ The Cost of Goods Sold was $$112,000.$

Resuirs:a

Comprte the firms's predetermined factory overhead rate for the year.

Prepare journal entries to record the August events. Letter your entries from a to $n.$

Calcuiate the amount of overapplied or underapplied overhead to be closed to the Cost of Goods Sold accourt on August $31.$

Prepare a schedule of Cost of Goods Manufactured and Cost of Goods Sold.

Compute the amount of overapplied or underapplied overhead that should be prorated to Work$-$inProcess, Finished Goods and Cost of Goods Sold

Using the results from requirements $4$ and $5,$ prepare the income statement for August. Comment on whether closing the entire amount of overapplied or underapplied overhead to Cost of Goods Sold would have been appropriate in this case.