Luzadis Company makes furniture using the latest automatedtechnology. The company uses a job-order costing system and appliesmanufacturing overhead cost to products on the basis ofmachine-hours. The predetermined overhead rate was based on a costformula that estimates $1,520,000 of total manufacturing overheadfor an estimated activity level of 76,000 machine-hours. During theyear, a large quantity of furniture on the market resulted incutting back production and a buildup of furniture in the company’swarehouse. The company’s cost records revealed the following actualcost and operating data for the year: Machine-hours 64,000Manufacturing overhead cost $ 1,471,000 Inventories at year-end:Raw materials $ 14,000 Work in process (includes overhead appliedof $64,000) $ 90,500 Finished goods (includes overhead applied of$204,800) $ 289,600 Cost of goods sold (includes overhead appliedof $1,011,200) $ 1,429,900 Required: 1. Compute the underapplied oroverapplied overhead. 2. Assume that the company closes anyunderapplied or overapplied overhead to Cost of Goods Sold. Preparethe appropriate journal entry. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.) 3. Assume that the company allocates anyunderapplied or over appliedoverhead proportionally to Work inProcess, Finished Goods, and Cost of Goods Sold. Prepare theappropriate journal entry. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.) 4. How much higher or lower will net operatingincome be if the underapplied or overapplied overhead is allocatedto Work in Process, Finished Goods, and Cost of Goods Sold ratherthan being closed to Cost of Goods Sold?