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Osborn Manufacturing uses a predetermined overhead rate of $20.20 per direct labor-hour. This predetermined rate was based on a cost formula that estimates $282,800 of total manufacturing overhead for an estimated activity level of 14,000 direct labor-hours. The company actually incurred $279,000 of manufacturing overhead and 13,500 direct labor-hours during the period. Required: 1. Determine the amount of underapplied or overapplied manufacturing overhead for the period. 2. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Would the journal entry to dispose of the underapplied or overapplied overhead increase or decrease the company's gross margin? By how much? by 1. Manufacturing overhead 2 The gross margin would underapplied decrease Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specially heavy equipment for use in North Sea oil fields. The company uses a job order costing system that applies manufacturing overhead cost to jobs on the basis of direct labor. hours. Its predetermined overhead rate was based on a cost formula that estimated $388.800 of manufacturing overhead for an estimated allocation base of 810 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $295,000 b. Raw materials used in production (all direct materials). $280,000. c. Utility bills incurred on account, $78,000 (95% related to factory operations, and the remainder related to selling and administrative activities) d. Accrued salary and wage costs: Direct labor (898 hours) Indirect labor Selling and administrative salaries $325, Bee $ 109,000 $ 205,000 e. Maintenance costs incurred on account in the factory, $73,000 Advertising costs incurred on account. $155,000. q. Depreciation was recorded for the year. $91,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $105,000 (85% related to factory facilities, and the remainder related to selling and administrative facilities) Manufacturing overhead cost was applied to jobs, $? J. Cost of goods manufactured for the year. $960,000. k. Sales for the year (all on account) totaled $2,150,000. These goods cost $990,000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the vear were: The balances in the inventory accounts at the beginning of the year were: 49,000 Raw Materials Work in Process Finished Goods $ 40,00 $ 79,000 Required: 1. Prepare journal entries to record the preceding transactions 2. Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above) 3. Prepare a schedule of cost of goods manufactured 4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4B. Prepare a schedule of cost of goods sold. 5. Prepare an income statement for the year. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Req 48 Reg 5 Prepare journal entries to record the preceding transactions. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction list Journal entry worksheet