Architects Incorporated uses a budgeted factory overhead rate to apply manufacturing overhead to production. The rate is based on direct labour hours. Estimates for year 2011 are shown below:

Estimated manufacturing overhead $500,000

Estimated direct labour hours 50,000

During 2011 Architects Incorporated used 60,000 direct labour hours. At the end of 2011, the company's records revealed the following information:

Raw materials inventory $ 40,000

Work-in-process inventory 100,000

Finished goods inventory 200,000

Cost of goods sold 700,000

Manufacturing overhead 510,000

Calculate the following below?

a) Calculate the budgeted overhead rate for 2011.

b) Determine the amount of underapplied or overapplied overhead for 2011.

c) If underapplied or overapplied overhead is treated as an adjustment to cost of goods sold, determine the cost of goods sold that would appear on the company's income statement.