Reference no: EM132911857

Problem - Prorate Under- or Overapplied Overhead - Southern Rim Parts estimates its manufacturing overhead to be $306,000 and its direct labor costs to be $1,020,000 for year 1. The first three jobs that Southern Rim worked on had actual direct labor costs of $61,000 for Job 301, $86,000 for Job 302, and $155,000 for Job 303. For the year, actual manufacturing overhead was $419,000 and total direct labor cost was $838,000. Manufacturing overhead is applied to jobs on the basis of direct labor costs using predetermined rates.

Overhead applied in each of the inventory accounts is as follows:

Work-in-process inventory $25,140

Finished goods inventory 75,420

Cost of goods sold 150,840

Required - Prepare an entry to prorate the under- or overapplied overhead.