Question

All one problem! Thank you!!

C 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 $ 131,000 $ 86,000 Purchase of raw materials Direct labor cost Manufacturing overhead costs: Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building $ 130,400 $ 8,000 $ 16,000 $ 12,000 $ 8,300 $ 33,000 Raw Materials Work in Process Finished Goods Beginning Ending $ 29,000 $14,000 $ 45,000 540,000 $ 68,000 $ 62,000 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.

Answer 1

1 Predetemined Overhead Rate $ $ Divide Estimated Manufacturing Overhead Estimated Direct Material Cost Predetermined rate Predetermined rate in % 126,000 90,000 1.40 140% 2 2 Under Applied - over Applied overhead Add Direct Material :- Raw Material Inventory Beginning Material purchased Raw material Available for use Ending Inventory of Raw Material Actual Direct Material used $ $ $ $ $ 29,000 131,000 160,000 14,000 146,000 less $ Multiply Actual Direct material used Predetermined rate Manufacturing Overhead applied Actual Manufacturing Overhead Under applied Overhead 146,000 Calculated above 140% 204,400 207,700 130400+8000+16000+12000+8300+33000 3,300 $ $ $ Less Overhead is under applied as applied OH is less than actual OH.

3 Cost of Goods Manufactured $ 45,000 Add $ $ $ $ 29,000 131,000 160,000 14,000 less Beginning Work in Process Direct Material :- Raw Material Inventory Beginning Material purchased Raw material Available for use Ending Inventory of Raw Material Direct Material used in production Direct Labor Manufacturing Overhead Applied to WIP Total Manufacturing cost added to production Totalmanufacturing cost to account for Ending Work in Process Cost of Goods Manufactured $ $ $ 146,000 86,000 204,400 Calculated in step 2 $ $ $ $ 436,400 481,400 40,000 441,400 less 4 Unadjusted Cost of Goods sold Add Finished Goods Inventory Beginning Cost of Goods Manufactured Cost of goods available for sale Ending Inventory of Finished Goods Unadjusted Cost Of Goods Sold $ $ $ $ $ 68,000 441,400 509,400 62,000 447,400 less 5 Direct Material Direct Labor Manufacturing on Work in Process inventory 8800 given 18880 12320 40,000 $ Manufacturin OH is 140% direct material = 8800 x 140% = 12320 Work in process ending inv is 40000 Direct labor = WIP - DM - OH =40000 - 8800 - 12320 = 18880