Question

1. Compute the predetermined overhead rate for the year.

2. Compute the amount of underapplied or overapplied overhead for the year.

3. Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials.

4. Compute the unadjusted cost of goods sold for the year. Do not include any underapplied or overapplied overhead in your answer.

5. Assume that the $39,000 ending balance in Work in Process includes $8,400 of direct materials. Given this assumption, supply the information missing below:

Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basis of direct materials used in production (not on the basis of raw materials purchased). Its predetermined overhead rate was based on a cost formula that estimated $124,600 of manufacturing overhead for an estimated allocation base of $89,000 direct material dollars to be used in production. The company has provided the following data for the just completed year: $ 135,000 85,000 Purchase of raw materials Direct labor cost Manufacturing overhead costs: Indirect labor Property taxes Depreciation of equipment 02:3421 $ 128,000 $ 8,500 $ 15,000 $ 15.000 $ 7,200 31.000 Rent, building Raw Materials Work in Process Pinished Goods Beginning Ending $ 25,000 $ 17,000 $ 47.000 $39,000 $ 71,000 $ 62,000 Required: 1. Compute the predetermined overhead rate for the year. 2. Compute the amount of underapplied or overapplied overhead for the year. 3. Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials. 4. Compute the unadjusted cost of goods sold for the year. Do not include any underapplied or overapplied overhead in your answer. 5. Assume that the $39,000 ending balance in Work in Process Includes $8,400 of direct materials. Given this assumption, supply the information missing below: Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required Compute the predetermined overhead rate for the year. Predetermined overhead rate

Answer 1

Compute predetermined overhead rate as follows: Estimated total manufacturing overhead cost Predetermined overhead rate= Estimated total amount of the allocation base $124.600 $89.000 = 140% Working as follows: Compute direct material used on production for the year: Raw material. Beginning Add: Purchase of raw materials Raw material available Less: Raw materials inventory. Ending Raw material used in production $25,000 $135.000 $160,000 ($17,000) $143,000

Compute the amount of underapplied or overapplied overhead for the year. Actual manufacturing overhead costs: Indirect labor $128.000 Property taxes $8.500 Depreciation of equipment $15,000 Maintenance $15,000 Insurance $7.200 Rent building $31.000 Total actual costs $204,700 Applied manufacturing overhaed cost [$143,000 x 140%] | $200,200 Underapplied overhead ($204,700 - $200200) $4,500 Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials.

Gitano Products
Schedule of cost of goods manufactured
Direct materials:
Raw material, Beginning	$25,000
Add: Purchase of raw materials	$135,000
Raw material available	$160,000
Less: Raw material, Ending	($17,000)	$143,000
Direct labor		$85,000
Manufacturing overhead applied to WIP		$200,200
Total manufacturing cost		$428,200
Add: WIP, beginning		$47,000
Less: WIP , ending		($39,000)
Cost of goods manufactured		$436,200

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4.

Compute the unadjusted cost of goods sold for the year. (Do not include any underapplied or overapplied overhead in your cost of goods sold figure.)

	Amount
Finished goods inventory, Beginning	$71,000
Add: Cost of goods manufactured	$436,200
Goods Available for sale	$507,200
Less: Finished goods inventory, Ending	($62,000)
COGS	$445,200