In the chegg problem below for ques 4 answer why would the net income be 39,000 greater if the underapplied overhead is allocated rather thanclosed entirely to cost of goods sold ?

Chegg Study Textbook Solutions Expert Q&A Practice Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $900,000 of total manufacturing overhead for an estimated activity level of 75,000 machine hours. During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year: Machine-hours 60,000 850,000 Manufacturing overhead cost Inventories at year-end: end: Raw materials Work in process (includes overhead applied of S36,000) Finished goods (includes overhead applied of S180,000) 30,000 100,000 500,000 1.400,000 Cost of goods sold includes overhead applied of $504,000) Required: 1. Compute the underapplied or overapplied overhead. 2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry. 3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and cost of Goods Sold. Prepare the appropriate journal entry. 4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold? (This question was already posted but someone left the wrong answer) Expert Answer e to search Chegg Study Textbook Solutions Expert Q&A Practico *** | Solution: Predetermined overhead rate (900000/75000) Actual overhead Less: Applied overhead (60000*12) Underapplied ovechead 850000 720000 130000 2) Cred Note: Ignore the order of commas in amount: Date Account title and explaination Cost of goods sold Manufacturing overhead (To close the underapplied overhead to COGS) Debit 1,30,000 $ $1,30,00 3) Date Credit Account title and explaination Work in process (100000/2000000) 130000 Finished goods (500000/2000000) "130000 Cost of goods sold (1400000/2000000) 130000 Manufacturing overhead (To close the underapplied overhead) $ $ $ Debit 6,500 32,500 91,000 $1.30.000 Net Operating income will be "Higher" by (130000 91000) $ 39,000 Comment > ctice with similar questions Luzadis Company makes furniture using the latest automated technology. The company uses a job-order cost custom and alios manufac . bandcartowadud d inbowThordalam