Use the following table, 

2. Journal Entry

Cost Of Goods Sold 77,975 Dr.

Factory Overhead 77,975 Cr.

Factory Overhead method comparisons
Using DL $s	Using DL hours	Using Machine Hours
Budgeted OH in Dollars – calculated in 5b	249,518	249,518	249,518
Estimated driver amount	137,235	10,000 DL hours	14,000 Machine hours
Predetermined overhead rate	0.55	24.95	17.82
Actual driver amounts	98,025	7,800 DL hours	13,800 hours
Applied factory overhead	63,525	194,610	245,916
over/(under) applied factory overhead amount	77,975	54,908	3,602
Over or Under-applied?	under	under	under

1. 
   write the journal entry (from 2 above) that would have been required to clear the Factory overhead account assuming the company applied overhead using
2. Direct labor hours:

2. Machine hours:
3. Think about the relationship of budgeted overhead to the amount of overhead applied. Given that the “drivers” were estimated to be higher than they were, does it make sense that overhead was underapplied? Compare the actual overhead with the estimated/budgeted overhead. What do you think is happening? Explain using 30 to 50 words.

3. Would using a different driver significantly affect the amount of Cost of Goods Sold recorded on the income statement for May? Why or why not? Explain.