Question

Saved Help Save & Exit Submit A manufacturer uses job-order costing. On January 1, the company's inventory balances were as follow 6 Raw materials Work in process Finished goods $50,500 $25,000 $38.100 30:25:20 The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the company's predetermined overhead rate was based on a cost formula that estimated $470,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were recorded for the year. a. Raw materials were purchased on account, $592,000. b. Raw materials used in production, $557,000. All of of the raw materials were used as direct materials c. The following costs were accrued for employee services direct labor, $442,000; indirect labor, $150,000; selling and administrative salaries, $295,000 d. Incurred various selling and administrative expenses (eg, advertising, sales travel costs, and finished goods warehousing). $381,000 e. Incurred various manufacturing overhead costs (eg, depreciation, insurance, and utilities) $320,000 1. Manufacturing overhead cost was applied to production. The company actually worked 41000 direct labor-hours on all jobs during the year 9. Jobs costing $1,399,450 to manufacture according to their job cost sheets were completed during the year h. Jobs were sold on account to customers during the year for a total of $2,908,500. The jobs cost $1,409,000 to manufacture according to their job cost sheets The company closes any over- or under-applied manufacturing overhead to Cost of Goods Sold. What is the gross margin for the year? (All answers are whole numbers - unless specified otherwise. You should NOT include the $ sign or a comma. Eg, you should type 1000 for one thousand. Negative numbers should be added with a minus sign, e.g.-1000 for a decrease or loss of one thousand) Gross margin-$ MC Graw Hill < Prev 26 of 26 Next

Answer 1

OH rate per DLH
Estimated Overheads			4,70,000
Divide: Estimated DLH			40,000
OH rate per DLH			11.75
Under/Over-applied Overheads
Overheads incurred
Indirect labour		1,50,000
Mfg Overheads cost		3,20,000
Overheads incurred			4,70,000
Overheads applied (41,000 DLH @ 11.75)	481750
Over-applied Overheads		11750
Computation of Adjusted Cost of goods sold
Cost of goods sold -unadjusted		14,09,000
Less: Over-applied overheads		-11750
Adjusted Cost of goods sold		13,97,250
Gross Profit:
Sales revenue			29,08,500
Less: Adjusted cost of goods sold		13,97,250
Gross Profit:			15,11,250
Answer is $ 1511,250