Arnold Company is a manufacturing firm that uses work order costing. The company's year-end and year-end inventory balances are as follows:

	Initial balance	Ending Balance
raw materials	21.000 $	24.000 $
In-process work	40.000 $	22.000 $
Finished goods	26.000 $	41.000 $

The company charges overhead on jobs using a predetermined overhead rate based on machine hours. At the beginning of the year, the company estimated it would run 38,000 machine-hours and incur an overall production cost of $266,000. 

The following transactions were recorded for the year: Raw material purchased, $300,000.

• $297,000 ($281,000 direct and $16,000 indirect) raw materials were requested to be used in production.
• The following employee costs occurred: 
• direct labor, $389,000; 
• indirect labor, $62,000; and 
• administrative salaries, $176,000.
• Cost of sale, $160,000.
• Factory operating costs, $19,000.
• Depreciation for the year was $143,000, of which $137,000 was related to factory operations and $6,000 was related to sales, general and administrative activities.
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• A general production load was applied to the jobs. 
• The actual activity level for the year was 34,000 machine-hours.
• Sales for the year amounted to $1,283,000
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• Based on the above data, you need to do the following:

  i) To prepare the cost table of the goods produced in a good way.

  ii) Has the overhead been under-applied or over-applied? How much?

  iii) Prepare an income statement for the year in good shape. The company charges under-applied or over-applied overheads to Cost of Goods Sold.