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 $109,200 of manufacturing overhead for an estimated allocation base of $84,000 direct material dollars to be used in production. The company has provided the following data for the just completed year: $ 138,000 $ 80,000 Purchase of raw materials Direct labor cost Manufacturing overhead costs: Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building $ 125,200 $ 8,900 $ 18,000 $ 12,000 $ 8,100 $ 30,000 Raw Materials Work in Process Finished Goods Beginning Ending $ 29,000 $ 14,000 $ 44,000 $ 40,000 $ 70,000 $ 61,000 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 $40,000 ending balance in Work in Process includes $8,000 of direct materials. Given this assumption, supply the information missing below:

Answer 1

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Solved first four sub parts as per HomeworkLib policy
Part-1
Estimated Manufacturing overhead	a	$   109,200
Direct material dollars to be used	b	$      84,000
Predetermined overhead Rate	a/b	130.00%	of Direct Material used
Part-2
Actual Overheads:
Indirect Labor		$   125,200
Property Tax		$        8,900
Depreciation on Equipment		$      18,000
Maintenance		$      12,000
Insurance		$        8,100
Rent, Building		$      30,000
Actual Overheads		$   202,200
Applied Overheads (130%*$153,000)		$   198,900
Underapplied overheads		$        3,300
Calculation of Direct Material used:
Beginning Raw Material		$      29,000
Add: Purchase		$   138,000
Less: Ending Rat Material		$   (14,000)
Direct Material used		$   153,000
Part-3
Direct Material used:
Beginning inventory - Direct Material			$      29,000
Add: Purchase of Direct Material			$   138,000
Total Direct Material available			$   167,000
Less: Ending Inventory - Direct Material			$   (14,000)
Direct Material used			$   153,000
Direct Labor			$      80,000
Actual Overheads			$   202,200
Manufacturing cost for the period			$   435,200
Add: Beginning Inventory - Work in process			$      44,000
			$   479,200
Less: Ending inventory - Work in process			$   (40,000)
Cost of Goods manufactured			$   439,200
Part-4
Beginning Finished Goods Inventory		$      70,000
Add: Cost of goods manufactured		$   439,200
Cost of goods available for sale		$   509,200
Less: Ending finished goods inventory		$   (61,000)
Unadjusted cost of goods sold		$   448,200