The following transactions occurred and were reported by ORANGE Corporation for the Month of January, 2019:

- Purchases $60,100 of raw materials, on account.

- Issued materials to production as follows:

- direct materials $50,000

- indirect materials $8,800

- Payroll for the month was as follows:

- direct labor, $75,000

- indirect labor, $36,000

- administrative, $28,000

- sales $19,000

- Depreciation on factory plant and equipment - $10,400.

- Property taxes on the factory accrued during the month - $1,450.

- Insurance on the factory which expired during the period (prepaid insurance was credited) - $6,200.

- Factory utilities - $5,500.

- Advertising paid with cash - $7,900.

- Depreciation on office equipment, $800; Depreciation on sales vehicle, $1,650.

- Accounting fees incurred by not yet paid for the annual tax planning, $750.

The company uses a normal costing system based on direct labor hours. Before the start of the year, overhead was budgeted at $972,000. 54,000 direct labor hours were budgeted for the year. While 4,500 hours were initially planned for the month, according to the time records, only 4,000 hours were actually used. The cost of jobs completed during the month totaled $160,000. The physical inventory count at the end of January revealed finished goods inventories of $15,000.

ORANGE had the following inventory balances as of January 1:

1. Prepare the Statements of Cost of Goods Manufactured and Cost of Goods Sold for the period. (Note: When preparing the Cost of Goods Manufacturing Statement, use ONE amount for overhead you need NOT list all of the individual overhead items.)

2. Show the Inventory section of the Balance Sheet for Montclair as of the end of January.

3. What factors could have caused overhead to be overapplied or underapplied for the period? (Hint: there are really ONLY 2)