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

a. Raw materials requisitioned for use in production, $41,000 (75% direct and 25% indirect).

b. Factory utility costs incurred, $14,700.

c. Depreciation recorded on plant and equipment, $28,200. 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 $ 41,000

Indirect labor $ 18,100

Sales commissions $ 10,100

Administrative salaries $ 26,000

e. Insurance costs incurred, $3,200 (75% relates to factory operations, and 25% relates to selling and administrative activities).

f. Miscellaneous selling and administrative expenses incurred, $18,100.

g. Manufacturing overhead was applied to production. The company applies overhead on the basis of 140% of direct labor cost.

h. Goods that cost $131,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.

i. Goods that had cost $121,000 to manufacture according to their job cost sheets were sold for $202,000.

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.)

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.)