Applying Overhead; Underapplied or Overapplied Overhead; Income Statement [LO 4-2, LO 4-4, LO 4-5] Durham Company uses a job-order costing system. The following transactions took place last year: a. Raw materials requisitioned for use in production, $40,000 (80% direct and 20% indirect) b. Factory utility costs incurred, $14,600 c. Depreciation recorded on plant and equipment, $28,000. 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 Indirect labor Sales commissions $40,000 ....$18,000 $10,000 ...$25,000 e. Insurance costs incurred, $3,000 (80% relates to factory operations, and 20% relates to selling and administrative activities) f. Miscellaneous selling and administrative expenses incurred, S18,000 g. Manufacturing overhead was applied to production. The company applies overhead on the basis of 150% of direct labor cost. h. Goods that cost $130,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse i. Goods that had cost $120,000 to manufacture according to their job cost sheets were sold for $200,000 Required. 1. Determine the underapplied or overapplied overhead for the year 2. 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.)