Answer:
Baab Corporation
a. Schedule of cost of goods manufactured:
Beginning work in process       $ 27,850
Direct raw materials                    280,150
Direct labor                                 377,850
Manufacturing overhead           297,279
Ending work in process            ($ 9,850)
Cost of goods manufactured $973,279
b. The overhead was underapplied (by $9,121).
Explanation:
a) Data and Calculations:
                            Beginning   Ending
Raw materials      $ 14,850 $ 22,850 
Work in process $ 27,850   $ 9,850 
Finished Goods $ 62,850  $ 77,850
Estimated machine hours = 33,850
Manufacturing overhead cost = $294,495
Predetermined overhead rate = $294,495/33,850 = $8.70 per mh
Raw materials purchase $315,850
Raw materials used for production $307,850
Direct raw materials $280,150
Indirect raw materials $27,700
Direct labor$377,850
Indirect labor, $96,850
Administrative salaries, $172,850
Selling costs, $147,850
Factory utility costs, $10,850
Depreciation:
  Factory Depreciation $171,000
  Selling, general, and admin. $7,000
Total for the year was $178,000
Actual level of activity for the year = 34,170 machine hours
Sales for the year = $1,315,000
Manufacturing Overhead:
Indirect raw materials         $27,700
Indirect labor,                        96,850
Factory utility costs,              10,850
Factory Depreciation           171,000
Total overhead incurred $306,400
Overhead applied              297,279
Underapplied overhead       $9,121