Allocation base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Machine-hours

Estimated manufacturing overhead cost. . . . . . . . . . . . . . $100,000

Estimated total amount of the allocation base . . . . . . . . . 50,000 machine-hours

Actual manufacturing overhead cost . . . . . . . . . . . . . . . . . $90,000

Actual total amount of the allocation base . . . . . . . . . . . . 40,000 machine-hours

Beginning inventories were:

Raw materials....$45,000

Work in progress....20,000

Finished Goods....32,000

For the current year the company's predetermined overhead rate was based on a formula that estimated $640,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor hours. The company applies overhead cost to jobs on the basis of direct labor hours.

1. What is the journal entry to record raw materials used in production?

2. What is the ending balance in Raw Materials?

3. What is the journal entry to record the labor costs incurred during the year?

4. What is the total amount of manufacturing overhead applied to production during the year?

5. What is the total manufacturing cost added to Work in Process during the year?

6. What is the journal entry to record the transfer of completed jobs that is referred to in item g above?

7. What is the ending balance in Work in Process?

8. What is the total amount of actual manufacturing overhead cost incurred during the year?

9. Is manufacturing overhead underapplied or overapplied for the year? By how much?

10. What is the cost of goods available for sale during the year?

11. What is the journal entry to record the cost of goods sold referred to in item h above?

12. What is the ending balance in Finished Goods?

13. Assuming that the company closes its underapplied or overapplied overhead to Cost of Goods Sold, what is the adjusted cost of goods sold for the year?

14. What is the gross margin for the year?

15. What is the net operating income for the year?