Durham Company uses a job-order costing system. The following transactions took place last year:
a. Raw materials requisitioned for use in production, $47,000 (70% direct and 30% indirect).
b. Factory utility costs incurred, $15,300.
c. Depreciation recorded on plant and equipment, $29,400. 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 $ 47,000
Indirect labor $ 18,700
Sales commissions $ 10,700
Administrative salaries $ 32,000
e. Insurance costs incurred, $4,400 (70% relates to factory operations, and 30% relates to selling and administrative activities).
f. Miscellaneous selling and administrative expenses incurred, $18,700.
g. Manufacturing overhead was applied to production. The company applies overhead on the basis of 150% of direct labor cost.
h. Goods that cost $137,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.
i. Goods that had cost $127,000 to manufacture according to their job cost sheets were sold for $214,000.
Required:
1. Determine the underapplied or overapplied overhead for the year.
Prepare an income statement for the year. (Hint: No calculations are required to determine the cost of goods sold before any adjustment for underapplied or overapplied overhead.)