Meredith Company is a family-owned enterprise that makes birdcages for the Southern Philippines market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. All of the companys transactions with customers, employees, and suppliers are conducted in cash; there is no credit. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated P330,000 of manufacturing overhead for an estimated activity level of P200,000 direct labor pesos. At the beginning of the year, the inventory balances were as follows: Raw materials 25,000 Work in process 10,000 Finished goods 40,000 During the year, the following transactions were completed: a) Raw materials purchased for cash, P275,000. b) Raw materials requisitioned for use in production, P280,000 (materials costing P220,000 were charged directly to jobs; the remaining materials were indirect). c) Costs for employee services were incurred as follows: Direct labor 180,000 Indirect labor 72,000 Sales commissions 63,000 Administrative salaries 90,000 d) Rent for the year was P18,000 (P13,000 of this amount related to factory operations, and the remainder related to selling and administrative activities). e) Utility costs incurred in the factory, P57,000. f) Advertising costs incurred, P140,000. g) Depreciation recorded on equipment, P100,000. (P88,000 of this amount was on equipment used in factory operations; the remaining P12,000 was on equipment used in selling and administrative activities.) h) Manufacturing overhead cost was applied to jobs, P_____. i) Goods that had cost P675,000 to manufacture according to their job cost sheets were completed. j) Sales for the year totaled P1,250,000. The total cost to manufacture these goods according to their job cost sheets was P700,000. Required: 1) Prepare the cost of goods manufactured and sold. (Any manufacturing overhead underapplied or overapplied is closed/disposed to cost of goods sold.) 2) Determine the amount of underapplied or overapplied manufacturing overhead, if any. 3) Prepare the income statement of Meredith Company. show solution