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 156,000

Fixed manufacturing overhead cost $652,000

Variable manufacturing overhead cost per machine-hour $4.70

Required:

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

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

Direct materials requisitioned $400

Direct labor cost $210

Machine-hours used 36

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 146,000 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,301,980. What is the amount of underapplied or overapplied overhead for the year? (Use the overhead rate determined in requirement 1.)

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