Question

please show all work and formulas used

PROBLEM 3-14 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 $800,000 of manufacturing overhead for an estimated allocation base of $500,000 direct material dollars to be Page 14 used in production. The company has provided the following data for the just completed year. $510,000 $90,000 Purchase of raw materials Direct labor cost Manufacturing overhead costs: Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building $ 170,000 $48,000 $260,000 $95,000 $7,000 $ 180,000 Beginning Ending Raw Materials $20,000 $80,000 Work in Process $ 150,000 $70,000 Finished Goods $260,000 $400,000 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. What options are available for disposing of underapplied or overapplied overhead? 5. Assume that the $70,000 ending balance in Work in Process includes $24,000 of direct materials. Given this assumption. supply the information missing below:

Answer 1

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Part 1	Predetermined overhead rate
Estimated Overheads	a	$       800,000
Estimated Direct Material cost	b	$       500,000
Predetermined overhead rate	a/b	160.00%
Part 2
Actual Overheads:
Indirect Labor		$       170,000
Property Tax		$         48,000
Depreciation of Equipment		$       260,000
Maintenance		$         95,000
Insurance		$            7,000
Rent, Building		$       180,000
Actual Overheads		$       760,000
Applied overheads ($510,000*160%)		$       816,000
Overapplied overheads		$         56,000
Part 3
Beginning work in process			$       150,000
Direct Materials:
Beginning Raw material		$         20,000
Add: Purchases		$       510,000
Total Raw material available for use		$       530,000
Less: Raw Material inventory , Jun 30		$       (80,000)
Direct Material used		$       450,000
Direct Labor		$         90,000
Manufacturing overheads Applied		$       816,000
Total Manufacturing Costs			$   1,356,000
Total cost of work in process			$   1,506,000
Less: Work in process, Jun 30			$       (70,000)
Cost of Goods Manufactured			$   1,436,000
Part 4
Beginning Finished Goods inventory		$       260,000
Add: Cost of goods manufctured		$   1,436,000
Cost of Goods available for sale		$   1,696,000
Less: Ending finished goods inventory		$     (400,000)
Unadjusted Cost of goods sold		$   1,296,000
Overapplied overheads should be closed to Cost of goods sold or in proprotion ot ending balance
Part 5
Direct Material	$   24,000
Manufacturing overheads (160% of $24,000)	$   38,400
Direct Labor ($70,000-$24,000-$38,400)	$     7,600