Question

Problem 3-14 (Algo) Schedule of Cost of Goods Manufactured; Overhead Analysis (LO3-3, LO3-4] 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 $126,000 of manufacturing overhead for an estimated allocation base of $90,000 direct material dollars to be used in production. The company has provided the following data for the just completed year: $ 137,000 $ 86,000 Purchase of raw materials Direct labor cost Manufacturing overhead costs: Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building $ 129,700 $ 8,700 $ 17,000 12,000 10,000 $ 33,000 Raw Materials Work in Process Finished Goods Beginning Ending $ 24,000 $ 14,000 $ 47,000 $ 38,000 $ 74,000 $ 56,000 Required: 1. Compute the predetermined overhead rate for the year. 2. Compute the amount of underapplied or overapplied overhead for the year. 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 $8,900 of direct materials. Given this assumption, supply the information missing below:

Required 1-5 please

Answer 1

1) Predetermine overhead rate = 126000/90000 = 140% of direct material used

2) Direct material used = 24000+137000-14000 = 147000

Applied overhead = 147000*1.4 = 205800

Actual overhead = 210400

Under applied overhead = 210400-205800 = 4600

3) Schedule of cost of goods manufactured

Direct material used
Beginning raw material	24000
Raw material purchase	137000
Raw material available for use	161000
Less; Ending raw material	-14000
Direct material used		147000
Direct labor		86000
Manufacturing overhead		205800
Total manufacturing cost		438800
Beginning work in process		47000
Total Cost of work in process		485800
Less: Ending WIP		-38000
Cost of goods manufactured		447800

4) Unadjusted cost of goods sold = 74000+447800-56000 = 465800

5) Calculate following

Direct material	8900
Direct labor	16640
Manufacturing overhead (8900*1.4)	12460
Total ending WIP	38000