Problem 3-12 Predetermined Overhead Rate; Disposing of Underapplied or Overapplied Overhead [LO3- 4] Luzadils 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 formula that estimates $1,207000 of total manufacturing overhead for an estimated activity level of 71,000 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 based on a cost Manufacturing overhead cost Inventories at year-end: 3 1,169,000 Raw materials work in process (includes overhead applied of $46,750) Finished goods (includes overhead applied of $187,e00) 11,000 100,000 400,000 1,500,000 Cost of goods sold (includes overhead applied of $701,25e) 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 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 Prey 5f5 Next