The Bering Company uses a job order cost system. The company's overhead is applied on the basis of direct labor costs. On January \(1,20 \mathrm{X} 9\), the company's records show the following account balances:

{Required:}
(1) Determine the ending inventory of finished goods on January 31 .
(2) Determine the amount of the underapplied or overapplied overhead for January.
(3) Explain how the underapplied or overapplied overhead should be reported on January \(31,20 \mathrm{X} 9\) financial statements.

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Raw materials.......... Work-in-process: $20,000 Materials .....$10,000 Direct labor......... .20,000 Applied overhead....... 10.000 40,000 Finished goods............. 40,000 During January, the following transactions were recorded: Materials purchased.......... $50,000 Direct labor costs incurred............... 50,000 Actual overhead incurred............... Cost of goods sold......... Cost of goods completed...... 32,000 160,000 150,000 The ending balance of raw materials on January 31 was $10,000.