Problem 3A-4 Transaction Analysis [LO3-5]

Morrison Company uses a job-order costing system to assign manufacturing costs to jobs. Its balance sheet on January 1 is as follows:

Morrison Company
Balance Sheet
January 1
Assets
Cash				$	37,350
Raw materials	$	17,200
Work in process		7,300
Finished goods		31,500			56,000
Prepaid expenses					2,900
Property, plant, and equipment (net)					107,000
Total assets				$	203,250
Liabilities and Stockholders Equity
Accounts payable				$	14,700
Retained earnings					188,550
Total liabilities and stockholders equity				$	203,250

During January the company completed the following transactions:

1. Purchased raw materials on account, $82,200.
2. Raw materials used in production, $94,700 ($75,000 was direct materials and $19,700 was indirect materials).
3. Paid $194,700 of salaries and wages in cash ($103,800 was direct labor, $43,800 was indirect labor, and $47,100 was related to employees responsible for selling and administration).
4. Various manufacturing overhead costs incurred (on account) to support production, $43,350.
5. Depreciation recorded on property, plant, and equipment, $56,800 (70% related to manufacturing equipment and 30% related to assets that support selling and administration).
6. Various selling expenses paid in cash, $37,100.
7. Prepaid insurance expired during the month, $1,800 (80% related to production, and 20% related to selling and administration).
8. Manufacturing overhead applied to production, $138,600.
9. Cost of goods manufactured, $299,400.
10. Cash sales to customers, $409,280.
11. Cost of goods sold (unadjusted), $295,200.
12. Cash payments to creditors, $64,800.
13. Underapplied or overapplied overhead $? .