Question

Check m 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. points eBook Print Purchase of raw materials $137,000 Direct labor cost $ 85,000 Manufacturing overhead costs: Indirect labor $137,700 Property taxes $ 8, 200 Depreciation of $ 15,000 equipment Maintenance $ 12,000 Insurance $ 8,000 Rent, building $ 33.000 Reference Beginning Ending Raw Materials $ 26,000 $13,000 Work in $ 47,000 $30,000 Process Finished $ 69,000 $59,000 Goods 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 $38,000 ending balance in Work in Process includes $8,000 of direct materials. Given this assumption, supply the information missing below: Complete this question by entering your answers in the tabs below. Required Required Required Required Required Compute the predetermined overhead rate for the year. Predetermined overhead rate Required i Required 2 >

Answer 1

1.Predetermined overhead rate=estimated overhead cost/estimated direct materials used
=	124600/89000=		140%
2.calculation of under or overapplied overeads
Raw materials inventory , beginning	$               26,000
Add:purchase of raw materials	$             137,000
Raw materials available	$             163,000
Less:raw material ending	$             (13,000)
Raw materials used in production	$             150,000
Actual manufacturing overhead cots
Indirect labor	$             137,700
Property taxes	$                  8,200
Depriciation	$               15,000
Maintenance	$               12,000
Insurance	$                  8,000
Rent,building	$               33,000
Total actual costs	$             213,900
Applies manufacturing overhead costs	$             210,000
150000*140%
Underapplied overhead	$                  3,900
3. schedule of cost of goods manufactured
Direct materials
Raw materials inventory , beginning	$               26,000
Add:purchase of raw materials	$             137,000
Raw materials available	$             163,000
Less:raw material ending	$             (13,000)
Raw materials used in production		$             150,000
Direct Labor		$               85,000
Manufacturing overhead applies to WIP		$             210,000
Total manufacturing costs		$             445,000
Add:WIP ,beginning		$               47,000
		$             492,000
Less:WIP Ending		$             (38,000)
Cost of goods manufactured		$             454,000
4
Cost of goods sold:
Finished goods inventory , beginning	$               69,000
Add:cost of goods manufacured	$             454,000
Goods available for sale	$             523,000
Less:ending finishefd goods inventory	$             (59,000)
Cost of goods sold	$             464,000
5
The amount of overhead cost in WIP would be:
$8000 direct materials * 130%=	$               11,200
The amount of direct labor cost inW IP would be
Total ending WIP		$               38,000
Less:direct materials		$               (8,000)
Less:Manufacturing overhead		$             (11,200)
Direct Labor cost		$               18,800
The complete schedule of costd in WIP would be
Direct materials	$                  8,000
Direct Labor	$               18,800
Manufacturing overhead	$               11,200
Work in process	$               38,000