Question

Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basis of direct materials used in (not on the basis of raw materials purchased), Its predetermined overhead rate was based on a cost formula that estimated $120,900 of manufacturing overhead for an estimated allocation base of $93,000 direct material dollars to be used in production. The company has provided the following data for the just completed year s 135,000 89,000 Direct labor eost 113,200 $ 8,700 $ 19,000 11,000 $ 7,500 $ 35,000 Indirect labor Insurance s 28,000 17,000 $ 46,000 35,000 $ 75,000 58,000 Pinished Goods 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 $35,000 ending balance in Work in Process includes $8.500 of direct materials, Given this assumption, supply the information missing below Complete this question by entering your answers in the tabs below. cost of or

Answer 1

Solution :-

Requirement 1 ) :-

From the given information , we need to find out the Predetermined Overhead Rate .

Predetermined Overhead Rate = [ 120,900 / 93,600 ] * 100

= 1.291 * 100

= 129.16 %

Predetermined Overhead Rate = 129.16 %

Predetermined Overhead Rate = 129.16 %

Requirement 2 ) :-

Here we need to find out the amount of under applied or over applied overhead for the year.

Overhead Applied :-

Overhead Applied = [ 28,000 + 135,000 + 11,000 ] * 129.16 %

= $174,000 * 129.16 %

Overhead Applied = $224,738.4

Overhead Incurred :-

Overhead Incurred =   Indirect labor + Property taxes + Depreciation of equipment +  Maintenance +  Insurance +  Rent, building

= 113,200 + 8,700 + 19,000 + 11,000 + 7,000 + 35,000

= $182,900

Overhead Incurred = $182,900

Now ,

Overhead Applied is greater than the Over head incurred . so, this is the over applied over head .

Finally ,

The amount of over applied over head = $224,738.4 - $182,900

= $41,838 .4

The amount of over applied over head =$41,838 .4

Requirement 3 ) :-

Particulars	Amount	Amount
Direct material used
Opening stock of raw material	$28,000
Purchases of raw material	$135,000
Closing stock of raw material	$11,000
Direct material used in production		= 28,000 + 135,000 - 11,000 = $152,000
Direct labor		$89,000
Manufacturing overhead applied to work in progress		$224,738.4
Total manufacturing costs		= $224,738.4 + $89,000 + $152,000 = $465,738.4
Opening WIP	$46,000
Closing WIP	$35,000
Cost of Goods manufactured		= $465,738.4 + $46,000 - $35,000 = $476,738.4

Requirement 4 ) :-

Particulars	Amount
Cost of Goods manufactured	$476,738.4
Opening stock of Finished goods	$75,000
Goods available for sale	= $476,738.4 + $75,000 = $551,738.4
Closing stock of Finished goods	$58,000
Cost of goods sold	= $551,738.4 - $58,000 = $493,738.4

Note :-

As HOMEWORKLIB RULES rule , i did only four questions due to less time . if you need that question also please upload it as a another question .

THANK YOU.