Cost Flows; Application of Overhead Platinum Wish is a small manufacturer of gold and platinum jewelry. It uses a job costing system that applies overhead on the basis of direct labor hours. Budgeted factory overhead for the year 2013 was $443,800, and management budgeted 31,700 direct labor-hours. The company had no materials, work-in process, or finished goods inventory at the beginning of April. These transactions were recorded during April:
a. April insurance cost for the manufacturing property and equipment was $1,600. The premium had been paid in January.
b. Recorded $1,025 depreciation on an administrative asset.
c. Purchased 21 pounds of high-grade polishing materials at $15 per pound (indirect material).
d. Paid factory utility bill, $6,510 in cash.
e. Incurred 4,000 hours and paid payroll costs of $160,000. Of this amount, 1,000 hours and $20,000 were indirect labor costs.
f. Incurred and paid other factory overhead costs, $5,770.
g. Purchased $24,500 of materials. Direct materials included unpolished semiprecious stones and gold. Indirect materials included supplies and polishing materials.
h. Requisitioned $18,500 of direct materials and $1,500 of indirect materials from materials inventory.
i. Incurred miscellaneous selling and administrative expenses, $5,660.
j. Incurred $3,505 depreciation on manufacturing equipment for April.
k. Paid advertising expenses in cash, $2,350.
l. Applied factory overhead to production on the basis of direct labor-hours.
m. Completed goods costing $65,000 manufactured during the month.
n. Made sales on account in August, $56,410. The cost of goods sold was $47,860.
Required
1. Compute the firm’s predetermined factory overhead rate for the year.
2. Prepare journal entries to record the April events.
3. Calculate the amount of overapplied or underapplied overhead to be closed to the Cost of Goods Sold account on April 30.
4. Prepare a schedule of cost of goods manufactured and sold.
5. Prepare the income statement for April.
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