Durham Company uses a job-costing system. The following transaction took place last year: a. Raw materials requisitioned for use in production, $40,000 (80% direct and 20% indirect). b. Factory utilities cost incurred, $14,600. c. Depreciation recorded on plant equipment, $28,000. Three -fourths of the depreciation relates to factory equipment, and the remainder relates to selling and administrative equipment. Costs for salaries and wages were incurred as follows: Direct Labor...................... $40,000 Indirect Labor................... $18,000 Sales Commissions.......... $10,000 Administrative Salaries... $25,000 e. Insurance costs incurred, $3,000 (80% relates to factory operations, and 20% relates to selling and administrative activities). f. Miscellaneous selling and administrative expenses incurred, $18,000. g. Manufacturing overhead was applied to production. The company applies overhead on the basis of 150% of direct labor costs. h. Goods that cost $130,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. i. Goods that had cost $120,000 to manufacture according to their job cost sheets were sold for $200,000. Required: 1. Determine the under applied or over applied overhead for the year. 2. Prepare an income statement for the year. (Hint: No calculations are required to determine cost of goods sold before any adjustment for under applied or over applied overhead.)