Question

Check my work 3 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: 5 points $ 132,000 $ 86,000 eBook Purchase of raw materials Direct labor cost Manufacturing overhead costs: Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building $ 119, 100 $ 8,800 $ 16,000 $ 15,000 $ 10,600 $ 36,000 Print Raw Materials Work in Process Finished Goods Beginning Ending $ 25,000 $13,000 $ 45,000 $ 36,000 $ 68,000 $ 57,000 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 $36,000 ending balance in Work in Process includes $8,700 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

126000 90000 132000 86000 Estimated Manufacturing overehead Estiamted Allocation Base ( Direct Material) Purchases of Raw Material Direct labor Cost Manufacturing overehad Cost Indirect labor Property Taxes Depreciation of Equipment Maintenance Insurance Rent, Building Total Manufacturing overhead Inventories Raw Material Work in Process Finished Goods 119100 8800 16000 15000 10000 36000 204900 Beginning Ending 25000 13000 45000 36000 68000 57000

1.) Predetermined overhead rate = Estimated Predetermiend overhead Rate = Estimated MOH / Allocation Base Predetermiend overhead Rate = 126000 / 90000 Answer 140% 2) Underapplied or Overapplied overhead Purchases of Raw Material 132000 ADD: Beginning Raw Material 25000 Less : Ending Raw Material 13000 Direct Material Used 144000 Applied overhead = Predetermined Rate Direct material Used 140% * 144000 201600 Less : Actual Overhead 204900 Underapplied Overhead 3300 Underapplied Overhead 3300 Answer

3) Schedule of Cost of Goods Manuacturing Direct Material Beginning Raw Material ADD: Purchase of Raw Material Total raw Material Available LESS: Ending Raw Material inventory Raw material Used in Prodcution Direct Labor Manufacturing overheads Applied Total Manufacturing cost ADD: Beginning Work in Process 25000 132000 157000 - 13000 144000 86000 2016000 431600 45000 476600 -36000 440600 LESS: Ending Work in Process Cost of Goods Manufactured 4) Unadjusted Cost of Goods Sold Beginning Finished Goods Inventory ADD: Cost of Goods Manufactured Cost of Goods Available for Sale LESS:Ending Finished Goods Invenotry Unadjusted Cost of Goods Sold Unadjusted Cost of Goods Sold 68000 4406001 508600 -57000 451600 451600 Answer 5-) Supplie the Missing amounts Direct Material Direct labor(36,000-8700-12180) Manufacturing overhead Work in Process inventory 8700 15120 12180 36000 87000*140%