Gold Nest Company uses job

order costing system in which o

verhead is applied to jobs on the basis of direct

labor cost. Estimated to

tal direct labor cost for the year would be $200,000 and total manufacturing overhead

cost would be $330,000. Inventory balance at the beginning

of the year were Raw materials at $25,000, work in

process at $10,000 and finished goods at $40,000.

During the

year, the following transactions were completed:

a.

Raw materials purchased for cash, $275,000

b.

Raw materials requisitioned for use in production, $280,000

. Materials charged directly to jobs,

$220,000, the remaining materials were indirect.

c.

Cost of employee

services were direct labor, $180,000; indirect labor, $72,000; sales commissions,

$63,000, and administrative salaries, $90,000.

d.

Rent for the year was $18,000 of which $13,000 is related to factory operations and the rest to selling and

administrative acti

vities.

e.

Factory utility costs incurred, $57,000

. Advertising costs

, $140,000.

f.

Depreciation recorded on equipment, $100,000, out of which $88,000 was for factory equipment and the

remaining was on equipment used in selling and administrative activities.

g.

Based on the job order cost sheets, goods manufactured

and completed during

the year cost $675,000

h.

Sales for the year, $1,250,000.

Cost to manufacture these goods according to their job cost sheets was

$700,000.

Required:

1.

Compute the total manufacturing o

verhead (MOH) applied to jobs for the year. Is the MOH

under-applied or over-applied? Close the balance to cost of goods sold and prepare statement of cost of goods manufactured and income statement for the year.