Question: PROBLEM 2-7. Underapplied or Overapplied Overhead [LO 5] In the past year, Oak Crafters Cabinets had total revenue of $2,500,000, cost of goods sold of

PROBLEM 2-7. Underapplied or Overapplied Overhead [LO 5] In the past year, Oak Crafters Cabinets had total revenue of $2,500,000, cost of goods sold of $1,000,000 (before adjustment for over- or underapplied overhead), administrative expenses of $600,000, and selling expenses of $400,000. During the year, overhead was applied using a predetermined rate of 75 percent of direct labor cost. Actual direct labor was $700,000. Actual overhead was $450,000. The ending balances in the inventory accounts (prior to adjustment for overapplied overhead) are: Raw Materials Inventory Work in Process Inventory Finished Goods Inventory $32,000 80,000 48,000 REQUIRED

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