Question

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 used in production The company has provided the following data for the just completed year: 1.87 Doints $ 510,000 $ 90,000 eBook 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 References Raw Materials Work in Process Finished Goods Beginning Ending $ 207 000 $ 80,000 $ 150,000 $70.000 $ 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. 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: Complete this question by entering your answers in the tabs below.

Answer 1

PagenNo O year The poudetenmined overhead rate for the 800,000 Poredetermined overhead rate = 500,000 160% %3D 2, The amount of underapplied or overapplied for the ovenhead year, Indiorect labor = S 170,000 Pro Perty taxes $ 48,000 De pau ciation of Equipment $ 260,000 %3D Maintenance $95,000 In şurance * 4,000 Rent. building & 180,00 Actual manufacturing oveahead cast = $ 760,000 %3D Applied manufactioring Ovenhead coşt = 20,000 +510,000 80,000

Pageno@ = $ 450, 000 x 160 Applied mamufactong oveshead cosť I 20,000 nderapplied oven head $460,000 720,000 $ 40,000 undeorapplied ovenhead $ 40,000 3, ScharduleofastafGoods Divect materials Rawmaterialsinventory, beginning 20,000 510,000 Add: Purchaled of Baw matemiall Total 530,000 yaw materialg arialable 80,00o Deduct : Rawmatevial inventorye nding 450.000 Rawmaterials used in Paoduction! 90,000 Disect la bor Manufacturing oveahead app lied to Work in Poca inventory 720,000 Total manufactwning costs 1,260,000 I50,000 Add: Begining work inPaall inventory 1410,000 badact Ending Costs of good coork in Paoal inventary manufactioad 70,000 1,340,000

Pageno ® 4, Tinighad goods inventong, bogining 260, 000 = 1,340,0000 Add Coât of goods manufuactaed Coşt of goods available for $ale = 1600,000 Deduct: Fimişhed goods imventory.ending =400,000 una djusted co&t of goods &old !200,000 5, Diorect mateniall 24,000 Diouct la bo r = 10,000 - 24,000- 38400%=D7600 Manulactuoing ovenhead - 24,000 X160%. = 38400 Llork in poroals imventory = 10,000