Moody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:



  Machine-hours required to support estimated production	 	155,000
  Fixed manufacturing overhead cost	$	659,000
  Variable manufacturing overhead cost per machine-hour	$	5.00


Required:
1.
Compute the predetermined overhead rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
 	 9.25


2.
During the year, Job 400 was started and completed. The following information was available with respect to this job:



  Direct materials requisitioned	$	390
  Direct labor cost	$	240
  Machine-hours used	 	35  * 9.25

 953.75

Compute the total manufacturing cost assigned to Job 400. (Do not round intermediate calculations and round final answer to 2 decimal places.)



3-a.
During the year the company worked a total of 145,800 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,352,150. What is the amount of underapplied or overapplied overhead for the year? (Use the overhead rate determined in requirement 1.)

        1,352,150-9.25(145,800)=1,352,150-1,348,650=3,500 underapplied

3-b.
If this amount were closed out entirely to Cost of Goods Sold, would net operating income increase or decrease?


	Increase
	Decrease <--- this one