Question

Chech 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 $136,500 of manufacturing overhead for an estimated allocation base of $91,000 direct material dollars to be used in production. The company has provided the following data for the just completed year: $ $ 134,aca 87,90 Purchase of raw materials Direct labor cost Manufacturing overhead costs: Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building $ $ $ $ $ $ 142, 129 8,888 29, eee 13, aea 8.789 31.aea Raw Materials Work in Process Finished Goods Beginning $ 23,eee $ 48,000 $ 75,eee Ending $ 11, $ 39,080 $ 60,000 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 $8,500 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 5 Compute the predetermined overhead rate for the year. Predetermined overhead rate % Required 1 Required 2 >

Answer 1

Answer :-

1) Predetermined overhead rate = Estimate Manufacturing overhead /Estimate allocation base direct material

Here we have taken estimate allocation base direct material because it given in question that applies overhead costs to Jonson the basis of direct materials

Given , Estimate Manufacturing overhead = $136,500

Estimate allocation base of direct materials = $91,000

Predetermined overhead rate = $136,500 /$91,000

Predetermined overhead rate = 1.5 or 150 % of direct materials used.

2)To find out the underapplied or overapplied for year,we first calculate the Raw material used .

Particular	Amount
Raw material in Beginning	$23,000
Add :- Raw material purchase	$134,000
Less :- Raw material in Ending	($11,000)
Raw material used	$146,000

Now we calculate the underapplied or overapplied overhead

Particular	Amount
Manufacturing overhead cost :
Indirect Labor	$142,100
Property taxes	8,800
Depreciation of equipment	20,000
Maintenance	13,000
Insurance	8,700
Rent, Building	31,000
Total Manufacturing overhead costs	$223,600
Applied overhead ( Raw material used × Predetermined overhead rate = $146,000 × 150%)	$219,000
Underapplied Overhead (Total manufacturing overhead costs - Applied overhead)	$4,600

3) Schedule of cost of goods manufactured for the year as follows :-

Particular	Amount
Raw materials used	$146,000
Direct labor cost	$87,000
Applied Overhead	$219,000
Total Manufacturing Costs ( Raw material used + Direct labor cost + Applied overhead )	$452,000
Add :- Beginning Work in Process	$48,000
Less :- Ending Work in Process	($39,000)
Cost of Goods Manufactured	$461,000

4) Cost of goods sold are as follows :-

Particular	Amount
Cost of Goods Manufactured	$461,000
Add:- Beginning Finished Goods	$75,000
Cost of Goods Available for Sale	$536,000
Less :- Ending Finished Goods	($60,000)
Cost of Goods Sold	$476,000

As HOMEWORKLIB RULES rule for multiple subpart ,we can give answer to only 4 subpart .