Davis Manufacturing Corporation applies manufacturing overhead on the basis of 150% of direct labor cost. An analysis of the related accounts and job order cost sheet indicates that during the year total manufacturing overhead incurred was \($315,000\) and that at year-end Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold included \($40,000,\) \($20,000,\) and \($140,000,\) respectively, of direct labor incurred during the current year.

a. Determine the underapplied manufacturing overhead at year-end (assume it is significant).

b. Prepare a journal entry to record the disposition of the underapplied manufacturing overhead.