Question

Furniture Company manufactures custom furniture only and uses a job order costing system to accumulate costs....


Furniture Company manufactures custom furniture only and uses a job order costing system to accumulate costs. This is Corbanzo’s first year of operation. Actual direct materials and direct labor costs are accumulated for each job, but a predetermined overhead rate is used to apply manufacturing overhead costs to individual jobs. Manufacturing overhead is applied on the basis of direct labor hours. In computing a predetermined overhead rate, the controller estimated that manufacturing overhead costs for the year would be $200,000 and direct labor hours would be 25,000. The following summary information is available for the year. Note: This summary information represents cost data related to hundreds of different job orders started or completed during the year.

●       Raw materials purchased during the year were $280,000.

●       Raw materials used as direct materials in production during the year were $250,000.

●       Wages paid to the furniture craftsmen during the year totaled $440,000 (22,000 hours).

●       Wages paid to factory maintenance workers during the year totaled $65,000.

●       Depreciation on machinery and equipment during the year was $100,000.

●       Rent and utilities for the factory building during the year totaled $30,000.

●       Raw materials used as indirect materials during the year were $10,000.

●       Manufacturing overhead was applied to Work-in-Process Inventory using the predetermined overhead rate.

●       Work-in-Process Inventory costing $800,000 was completed and transferred to Finished Goods Inventory.

●      Goods costing $750,000 were sold (ie COGS = $750,000)

Part 1

a. Direct Labor Cost = $

b. Direct Material Cost = $

c. Allocated Overhead = $

d. Actual Overhead = $

Part 2

AFTER the appropriate closing of any OVER- or UNDER-applied Manufacturing Overhead amount, what is the final amount of Cost of Goods Sold?

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