Question

Baab Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning Balance Endine Balance Raw materials $ 14,950 $ 22,950 Work in process $ 27,950 $ 9950 Finished Goods $ 62,950 $ 77,950 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 33,950 machine hours and incur $302,155 in manufacturing overhead cost. The following transactions were recorded for the year: Raw materials were purchased, $315,950. Raw materials were requisitioned for use in production, $307,950 ($220,050 direct and $27,900 indirect). The following employee costs were incurred direct labar, $377,950; indirect labor, 596,950, and administrative salaries, $172,950 Selling costs $147,950. Factory utility costs, $10,950. Depreciation for the year was $184,000 of which $173,000 is related to factory operations and $11,000 is related to selling general, and administrative activities Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,190 machine-hours. Sales for the year totaled $1,325,000. Required: Do not enter any commas (except for the pre-determined OH rato) and round to the nearest dollar Based on the data presented above, complete the following Table Pre-Determined OH Rate (round to 2 decimal places) Direct Matcrials used in Production $377,950 Direct Lubor Total Manufacturing Costs Cost of Goods Manufactured Adjusted Cost of Goods Sold $331,900 Total Selling and Admin Exp Operating Income

Answer 1

Predetermined OH	8.90	[302155/33950]
Direct materials used in production	280050
Direct Labor	377950
Total manufacturing costs	962291
Cost of goods manufactured	1,043,241
Adjusted cost of goods sold	969,800
Total selling and admin exp	331900
Operating income	23,300

Workings:

Direct materials used	280050
Direct Labor	377950
Manufacturing overheads applied	304291	[34190*8.9]
Total manufacturing costs	962291
Add: Opening work in process	27950
Less: Closing WIP	9950
Cost of goods manufactured	980291

Actual overheads
Indirect materials	27900
Indirect labor	96950
Factory Machinery Depreciation	173000
Factory utilities	10950	308,800

Beginning balance of finished goods	62950
Cost of Goods Manufactured	980291
Cost of goods available for sale	1,043,241
Less: Ending bal of finished goods	77950
Add: Underapplied overheads [308,800-304291]	4509
Adjusted cost of goods sold	969,800

Sales	1,325,000
Less: Adjusted cost of goods sold	969800
Less: Total admin and selling exp	331,900
Operating income	23,300