The following data were taken from the records of Ivanhoe Enterprises, a Canadian manufacturer that uses a normal job-order costing system:

		Work in Process, December 1
Job Number		70		75		80
Direct materials		$2,070		$2,760		$1,720
Direct labour		1,380		2,760		690
Applied overhead		690		1,550		520
Total		$4,140		$7,070		$2,930

During December, the company worked on jobs numbered 70 through 90 and incurred the following costs:

Job Number		70		75		80		85		90		Total
Direct materials		$690		$1,040		$1,380		$1,550		$1,720		$6,380
Direct labour		$860		$1,720		$3,450		$2,590		$6,900		$15,520
Direct labour hours		60		120		230		170		460		1,040

Additional information:

1.

Total overhead costs are applied to jobs on the basis of direct labour hours worked. At the beginning of the year, the company estimated that total overhead costs for the year would be $172,440, and the total labour hours worked would be 14,370.

2.

The balance in the Departmental Overhead Control account on December 1 was $184,010. Actual direct labour hours for the previous 11 months (January through November) were 12,940.

3.

There were no jobs in finished goods on December 1.

4.

Expenses for December were as follows (not yet recorded in the books of account):

Direct materials purchased		$8,630
Salaries
Production clerk		1,720
Supervisor		2,530
Depreciation (plant and equipment)		2,860
Factory supplies		1,720
Sales staff salaries		10,580
Utilities (factory)		2,070
Administrative expenses		10,930
		$41,040

5.

The company writes off all under- or over-applied overhead to Cost of Goods Sold at the end of the year.

6.

Jobs 70, 80, 85, and 90 were completed during December. Only Job 90 remained in finished goods on December 31.

7.

The company charges its customers 250% of total manufacturing cost.

8.

Cost of goods sold to December 1 was $41,040.

Using the information given, calculate the following amounts:

1.		The predetermined overhead rate used to apply overhead to products			per labour hour
2.		The cost of ending work in process inventory
3.		The cost of goods manufactured in December
4.		The unadjusted gross margin for December

Calculate the under- or over-applied overhead for the year.

What effect would this amount have on net income?