the following data relate to the activities of pardon company during the year

1. raw materials purchased on account $150,000

2. raw materials issued to production $145,000 (all direct material)

3. advertising cost incurred for the year $50,000 (credit account payable)

4. Utilities cost incurred for the factory $35,000 (credit accounts payable)

5. salaries and wages costs incurred: direct labor $250,000 (30,000 hours); indirect labor $75,000; selling and administrative $140,000

6. Depreciation recorded the year $20,000 of which 75% related to the factory and 25% related to selling and administrative functions

7. Other factory overhead costs incurred for the year $30,000 (credit account payable)

8. other selling and administrative expenses incurred for the year $25,000 (credit acconts payable)

9. Prepaid insurance of $4,000 expired during the year; all of this is related to the factory

10. The company applies overhead on the basis of direct labor at $5.50 per hour

11. the cost of goods manufactured for the year totaled $550,000

12. goods that cost $540,000 according to their job costs sheets were sold on account for $800,000

13. collections on account from customers during the year totaled $790,000

14. cash disbursed during the year: on accounts payable $300,000 for salaries and wages $460,000

a. is overhead undersupplied or oversupplied for the year? close the balance to cost of goods sold (key the entry as #15)

b. prepare an income statement for the year using the form that appears below