Question

1. Predetermined overhead rate: 130%

2. Underapplied overhead 3,800

3. Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials 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.

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 $113,100 of manufacturing overhead for an estimated allocation base of $87,000 direct material dollars to be used in production. The company has provided the following data for the just completed year: 10 points Purchase of raw materials Direct labor cost Manufacturing overhead costs: $ 130,000 83,0ee eBook Print References Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building 103,209 $ 8,000 16,000 15,000 $ 7,400 31,000 Raw Materials Work in Process Finished Goods 22,000 16,000 $ 48,000 37,000 72,000 56,000 Required: 1. Compute the predetermined overhead rate for the year. 2. Compute the amount of underapplied or overapplied overhead for the year ule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct material 3. Prepare a sched 4. Compute the unadjusted cost of goods sold for the year. Do not include any underapplied or overapplied overhead in your answe 5. Assume that the $37000 ending balance in Work in Process includes $8,600 of direct materials. Given this assumption, supply th

Answer 1

Cost of Goods Manufactured Schedule
Direct Material Used
Opening Stock of Raw Material	$22,000.00
Add Purchases of Raw Material	$1,30,000.00
Less Closing Stock of Raw Material	$16,000.00
Direct Material Used in Production *		$1,36,000.00
Direct Labor		$83,000.00
Manufacturing Overhead Applied to Work in Progress		$1,76,800.00
Total Manufacturing Costs		$3,95,800.00
Add Opening WIP	$48,000.00
Less Closing WIP	$37,000.00
Cost of Goods Manufactured		$4,06,800.00

*Overhead Applied = (Opening Value of Direct Material + Purchase of Direct Material - Closing Value of Direct Material)*Predetermined Overhead Rate = (22,000 + 130,000 - 16,000)*130% = $176800

Computation of Unadjusted cost of Goods Sold
Cost of Goods Manufactured	$4,06,800.00
Add Opening Stock of Finished Goods	$72,000.00
Goods Available for Sale	$4,78,800.00
Less Closing Stock of Finished Goods	$56,000.00
Cost of Goods Sold	4,22,800