Division B uses normal costing in its job-order costing system, with manufacturing overhead applied based on direct labour hours. You have obtained the following information about the operation of the Division.
1) What would be the amount of the „under - or - over applied manufacturing overhead? for the year. Indicate whether it is under or over applied.)
2) For this requirement assume that the:
Part A: Give the general journal entry required on December 31, Year 2 to close the overhead accounts by proration based on the ending balances in Work in Process, Finished Goods and Cost of Goods Sold (to the nearest whole $).
By how much would the net income change if the Division closed the overapplied overhead to the "Cost of Goods Sold" instead of prorating it? Would there be an increase or decrease in net income?