Assignment:
Durham Company uses a job-order costing system. The following transactions took place last year:
a. Raw materials requisitioned for use in production, $51,000 (75% direct and 25% indirect).
b. Factory utility costs incurred, $15,700.
c. Depreciation recorded on plant and equipment, $30,200. Three-fourths of the depreciation relates to factory equipment, and the remainder relates to selling and administrative equipment.
d. Costs for salaries and wages were incurred as follows:
| Direct labor |
$ |
51,000 |
| Indirect labor |
$ |
19,100 |
| Sales commissions |
$ |
11,100 |
| Administrative salaries |
$ |
36,000 |
e. Insurance costs incurred, $5,200 (75% relates to factory operations, and 25% relates to selling and administrative activities).
f. Miscellaneous selling and administrative expenses incurred, $19,100.
g. Manufacturing overhead was applied to production. The company applies overhead on the basis of 140% of direct labor cost.
h. Goods that cost $141,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.
i. Goods that had cost $131,000 to manufacture according to their job cost sheets were sold for $222,000.
1. What is the underapplied or overapplied overhead for the year?
2. On an income statement, what is the sales, Cost of Goods Sold, Gross Margin, Selling & Administrative expenses and the Net Operating Income?
Provide complete and step by step solution for the question and show calculations and use formulas.