Reference no: EM132628893

Problem 1: Media, Inc., an advertising agency, applies overhead to jobs on the basis of direct professional labor hours. Overhead was estimated to be $150,000, direct professional labor hours were estimated to be 15,000, and direct professional labor cost was projected to be $225,000. During the year, Media incurred actual overhead costs of $146,000, actual direct professional labor hours of 14,500, and actual direct labor cost of $222,000. By year-end, the firm's overhead was:

A. $1,000 under-applied.
B. $1,000 over-applied.
C. $4,000 under-applied.
D. $4,000 over-applied.
E. $5,000 under-applied.

Problem 2: Howard Manufacturing's overhead at year-end was under-applied by $5,800, a small amount given the firm's size. The year-end journal entry to record this amount would include:

A. a debit to Cost of Goods Sold.
B. a debit to Manufacturing Overhead.
C. a debit to Work-in-Process Inventory.
D. a credit to Cost of Goods Sold.
E. a credit to Work-in-Process Inventory.