Durham Company uses a job-order costing system. The following transactions took place last year:

a. Raw materials requisitioned for use in production, $52,000 (80% direct and 20% indirect).

b. Factory utility costs incurred, $15,800.

c. Depreciation recorded on plant and equipment, $30,400. 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	$	52,000
Indirect labor	$	19,200
Sales commissions	$	11,200
Administrative salaries	$	37,000

e. Insurance costs incurred, $5,400 (80% relates to factory operations, and 20% relates to selling and administrative activities).

f. Miscellaneous selling and administrative expenses incurred, $19,200.

g. Manufacturing overhead was applied to production. The company applies overhead on the basis of 130% of direct labor cost.

h. Goods that cost $142,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.

i. Goods that had cost $132,000 to manufacture according to their job cost sheets were sold for $224,000.

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.)