Question

Dobson Manufacturing Company uses a job order cost system with manufacturing overhead applied to products on the basis of direct labor dollars. At the beginning of the most recent period, the company estimated its total direct labor cost to be $58,500 and its total manufacturing overhead cost to be $111,150.

Several incomplete general ledger accounts show the transactions that occurred during the most recent accounting period which is given in second requirement.

Required:
1. Calculate the predetermined overhead rate.

2. Fill in the missing values in the T-accounts.

Raw Materials Inventory Work in Process Inventory Beginning Balance 13,900 Beginning Balance 29,600 Purchases 93,500 Direct Materials 68,100 Ending Balance 28,100 Direct Labor $40,200 Applied Overhead Ending Balance 19,900 Finished Goods Inventory Cost of Goods Sold Beginning Balance 40,400 Unadjusted Cost of Goods Sold Cost of Goods Completed Adjusted Cost of Goods Sold Ending Balance 49,900 Sales Revenue Manufacturing Overhead 318,000 Indirect Materials 11,200 Applied Overhead Indirect Labor 13,200 Factory Depreciation 11,200 Factory Rent 5,100 Factory Utilities 2,100 Other Factory Costs 9,200 Actual Overhead 52,000 Selling, General, and Administrative Expenses Adm. Salaries 27,100 Office Depreciation 19,800 Advertising 13,100 Ending Balance 60,000

3. Compute over- or underapplied overhead

	Manufacturing Overhead

4. Prepare a statement of cost of goods manufactured and sold including the adjustment for over- or underapplied overhead.

	DOBSON MANUFACTURING COMPANY Cost of Goods Manufactured and Sold Report Direct Materials Used in Production Total Current Manufacturing Costs $0 Total Work in Process $0 Cost of Goods Manufactured Cost of Goods Available for Sale $0 Unadjusted Cost of Goods Sold Adjusted Cost of Goods Sold

5. Prepare a brief income statement for the company.

DOBSON MANUFACTURING COMPANY Income Statement Net Income from Operations

Answer 1

Predetermined OH rate =			Estimated Manu. OH cost / Est. Direct Labor Cost
		=	$ 111150 / $ 58500
		=	1.9	times
Applied OH		=	Actual Direct Labor Cost x 1.9
		=	$ 40200 x 1.9
		=	$ 76,380.00

Raw Materials Inventory
Beginning Balance		$   13,900.00	Work in Process		$ 68,100.00
Purchases		$   93,500.00	Manu. Overhead		$ 11,200.00
Ending Balance		$   28,100.00

Work in Process Inventory
Beginning Balance		$ 29,600.00	Finished Goods		$ 194,380.00
Direct Materials		$ 68,100.00
Direct Labor		$ 40,200.00
Applied Overhead		$ 76,380.00
Ending Balance		$ 19,900.00

Manufacturing Overhead
Indirect Materials		$ 11,200.00	Applied OH	$ 76,380.00
Indirect Labor		$ 13,200.00
Factory Depreciation		$ 11,200.00
Factory Rent		$   5,100.00
Factory Utilities		$   2,100.00
Other Factory Costs		$   9,200.00
Actual Overhead		$ 52,000.00

Over applied OH

$ 24,380.00

Finished Goods Inventory
Beginning Balance		$   40,400.00	Cost of Goods sold
Cost of Goods Comp.		$ 194,380.00
Ending Balance		$   49,900.00

Cost of Goods Sold
Unadjusted COGS		$ 184,880.00	Overapplied OH		$ 24,380.00
Adjusted COGS		$ 160,500.00

	Schedule of Cost of Goods Manufactured
	Direct materials:
	Beginning R.M inventory			$    13,900.00
Add:	Purchase of R.M			$    93,500.00
	Total R.M available			$ 107,400.00
Less:	Ending R.M inventory			$ (28,100.00)
	Indirect Material Used			$ (11,200.00)
	D.M used in production				$    68,100.00
	Direct labor				$    40,200.00
	Manufacturing OH applied				$    76,380.00
	Total manufacturing costs				$ 184,680.00
Add:	Beginning WIP Inventory				$    29,600.00
					$ 214,280.00
Less:	Ending WIP inventory				$ (19,900.00)
	Cost of goods manufactured				$ 194,380.00

	Schedule of Cost of Goods Sold
	Beginning F.G inventory				$    40,400.00
Add:	Cost of Goods Manufactured				$ 194,380.00
	Cost of goods available for sale				$ 234,780.00
Less:	Ending F.G inventory				$ (49,900.00)
	Unadjusted cost of goods sold				$ 184,880.00
Add:	Overapplied OH				$ (24,380.00)
	Adjusted cost of goods sold				$ 160,500.00

Income Statement
Sales				$    318,000.00
Cost of Goods Sold				$ (160,500.00)
Gross Margin				$    157,500.00
Selling and Adm. Exp:
Adm. Salaries			$    (27,100.00)
Office Depreciation			$    (19,800.00)
Advertising			$    (13,100.00)	$    (60,000.00)
Net Operating Income				$      97,500.00