The following cost data relate to the manufacturing activities of the SIS Limited during the most recent year: Opening raw materials Closing raw materials Raw materials purchase Opening work in process Closing work in process Direct labor Depreciation for cquipment for factory Electricity for factory Indirect labor Depreciation for machinery factory Insurance for factory 7,500 6,000 11,500 3,000 4,000 22,000 1,000 2,600 |5,700 7,050 8,450 The company uses a predetermined overhead rate to charge the overhead cost to production. The rate for the year just completed was $8.00 per machine-hour; a total of 4,000 machine hours were recorded for the year. Required: a. Compute the amount of underapplied or overapplied overhead cost for the year just ended. (4 marks) b. Prepare a schedule of cost of goods manufactured for the year. (22 marks) c. Explain how producing more units than can be sold can increase operating income. Would this be an issue in a service company, or is it only an issue in a manufacturing environment? Could a company employ this strategy indefinitely to show continuous increases in profits?