Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,068,000 of total manufacturing overhead for an estimated activity level of 89,000 machine-hours.

During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year:

Machine—hours 67,000
Manufacturing overhead cost 551,000
Inventories at year—end :
Raw materials $13,000
Work in process (includes overhead applied of $37 , 520) 139,300
Finished goods ( includes overhead applied of $101, 840) 378,100
Cost of goods sold (includes overhead applied of $396, 640) $1,472,600

Required:
1. Compute the under-applied or over-applied overhead.
2. Assume that the company closes any under-applied or over-applied overhead to Cost of Goods Sold. Prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
3. Assume that the company allocates any under-applied or over applied-overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry.