Biloxi Billiards Company uses normal costing, and manufacturing overhead is applied to work in process on the basis of machine hours. On January 1 of the current year there were no balances in work-in-process or finished-goods inventories. The following estimates were included in the current year’s budget.

Total budgeted manufacturing overhead ..................................................................................................             $306,000

Total budgeted machine hours ................................................................................................................            51,000

During January, the firm began the following production jobs:

M07:            1,200 machine hours

T28:             3,000 machine hours

B19:             1,800 machine hours

During January, job numbers M07 and T28 were completed, and job number M07 was sold. The actual manufacturing overhead incurred during January was $38,000.

Required:

1.      Compute the company’s predetermined overhead rate for the current year.

2.      How much manufacturing overhead was applied to production during January?

3.      Calculate the overapplied or underapplied overhead for January.

4.      Prepare a journal entry to close the balance calculated in requirement (3) into Cost of Goods Sold.

5.      Prepare a journal entry to prorate the balance calculated in requirement (3) among the Work-in- Process Inventory, Finished-Goods Inventory, and Cost of Goods Sold accounts.