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2. (15 points) Baab Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end

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2. (15 points) Baab Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning Balance Ending Balance Raw materials S 14,000 s 22.000 Work in process 27,000 $ 9,000 Finished Goods 62,000 s 77,000 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 33,000 machine-hours and incur $231,000 in manufacturing overhead cost. The following transactions were recorded for the year: Raw materials were purchased, S315,000. Raw materials were requisitioned for use in production, $307,000 ($281,000 direct and S26,000 indirect). The following employee costs were incurred: direct labor, 5377,000; indirect labor, 596,000; and administrative salaries, S172,000. Selling costs, S147,000 Factory utility costs, S10,000. Depreciation for the year was $127,000 of which $120,000 is related to factory operations and $7,000 is related to selling, general, and administrative activities. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,000 machine-hours. Sales for the year totaled $1,253,000 Required: a. Prepare a schedule of cost of goods manufactured. b. Was the overhead underapplied or overapplied? By how much? c. Prepare a schedule of cost of goods sold. The company closes any underapplied or overapplied overhead to Cost of Goods Sold

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