Ravsten Company uses a job-order costing system. The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 26,000 machine-hours and incur $124,800 in manufacturing overhead cost.

The following transactions occurred during the year:

a. Raw materials requisitioned for use in production, $300,000 (80% direct and 20% indirect).

b. The following costs were incurred for employee services: Direct labor $ 171,000 Indirect labor $ 29,000 Sales commissions $ 21,000 Administrative salaries $ 36,000 c. Heat, power, and water costs incurred in the factory, $60,000.

d. Insurance costs, $21,000 (90% relates to factory operations, and 10% relates to selling and administrative activities).

e. Advertising costs incurred, $61,000. f. Depreciation recorded for the year, $71,000 (85% relates to factory operations, and 15% relates to selling and administrative activities).

g. The company used 51,000 machine-hours during the year.

h. Goods that cost $491,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.

i. Sales for the year totaled $722,000. The total cost to manufacture these goods according to their job cost sheets was $486,000.

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.) (Round your intermediate calculations to two decimal places.)