ARKANSAS CORPORATION is a company that produces machinery to customer order. Its job costing system, using normal costing, has two direct cost categories, direct materials and direct labor, and one indirect cost pool, manufacturing overhead, allocated using a budgeted rate based on direct labor costs. Budgeted and actual information for 2016 are as follows: Budget $420,000 $400,000 $252,000 $186,840 Direct Labor Manufacturing overhead At the end of 2016, the ending work in process consisted of: Ending Work In Process: Direct Materials Direct Labor Overhead Actual $64,000 50,000 30,000 $144,000 There were no beginning work-in-process or finished-goods inventories. Ending Finished Goods showed a balance of $156,000, which included overhead costs of $25,200. Cost of goods sold was $1,600,000, of which $184,800 consisted of applied overhead./n8. Prepare the adjusting journal entries for 7a and 7b. Which approach is theoretically preferred? WHY?

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