Job order costing Double Corporation is a manufacturer that uses job-order costing. On January 1, the beginning of its fiscal year, the company’s inventory balances were as follows: Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P20,000 Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P15,000 Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P30,000 The company applies overhead cost to jobs on the basis of machine-hours worked. For the current year, the company’s predetermined overhead rate was based on a cost formula that estimated P450,000 of total manufacturing overhead for an estimated activity level of 75,000 machine hours. The following transactions were recorded for the year: a. Raw materials were purchased on account, P410,000. b. Raw materials were requisitioned for use in production, P380,000 (P360,000 direct materials and P20,000 indirect materials). c. The following costs were accrued for employee services: direct labor, P75,000; indirect labor, P110,000; sales commissions, P90,000; and administrative salaries, P200,000. d. Sales travel costs were P17,000. e. Utility costs in the factory were P43,000. f. Advertising costs were P180,000. g. Depreciation was recorded for the year, P350,000 (80% relates to factory operations, and 20% relates to selling and administrative activities). h. Insurance expired during the year, P10,000 (70% relates to factory operations, and the remaining 30% relates to selling and administrative activities). i. Manufacturing overhead was applied to production. Due to greater than expected demand for its products, the company worked 80,000 machine-hours on all jobs during the year. j. Goods costing P900,000 to manufacture according to their job cost sheets were completed during the year. k. Goods were sold on account to customers during the year for a total of P1,500,000. The goods cost P870,000 to manufacture according to their job cost sheets. Required: 1. Is Manufacturing Overhead underapplied or overapplied for the year? Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. Do not allocate the balance between ending inventories and Cost of Goods Sold. 2. Prepare an income statement for the year