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ter 3 - Homework Saved Help Save You received partial credit in the previous attempt Check my work View pre 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 $110,400 of manufacturing overhead for an estimated allocation base of $92,000 direct material dollars to be used in production. The company has provided the following data for the just completed year: $133,000 $ 88,000 Purchase of raw materials Direct labor cost Manufacturing overhead costs: Indirect labor Property taxes Depreciation of $ 88,500 $ 8, 600 $ 18,000

Answer 1

Requirement 1:

Predetermined overhead rate = Estimated Manufacturing overhead cost / Direct material cost * 100

Predetermined overhead rate = $110,400 / $92,000 * 100 = 120%

Requirement 2:

Step 1: Applied manufacturing overhead cost

Applied manufacturing overhead cost = Direct materials used in the production * Predetermined overhead rate

Direct materials used in the production = Beginning Raw materials + Purchases of Raw materials - Ending Raw materials

Direct materials used in the production = $27,000 + $133,000 - $18,000 = $142,000

Applied manufacturing overhead cost = $142,000 * 120% = $170,400

Step 2: Total Actual manufacturing overhead cost

Total actual manufacturing overhead cost = $88,500 + $8,600 + $18,000 + $13,000 + $7,900 + $38,000 = $174,000

Step 3: Under or over applied overhead cost

Under applied manufacturing overhead cost = $170,400 - $174,000 = $3,600

Under applied overhead = $3,600

Requirement 3:

Gitano Products

Schedule of cost of goods manufactured

Particulars	$	$
Direct Materials
Beginning Raw materials	27,000
Add: Raw materials purchases	133,000
Total Raw materials available	160,000
Less: Ending raw materials	18,000
Raw Materials used in production		142,000
Direct Labor		88,000
Overheads Applied		170,400
Total Manufacturing costs		400,400
Add: Beginning work in process		46,000
Total cost work in process		446,400
Less: Ending work in process		39,000
Cost of goods manufactured		407,400

Requirement 4:

Gitano Products

Unadjusted cost of goods sold

Particulars	$
Beginning Finished goods inventory	73,000
Add: Cost of goods manufactured	407,400
Less: Ending finished goods inventory	61,000
Unadjusted cost of goods sold	419,400

Requirement 5:

Particulars	$
Direct Materials	8,100
Direct Labor ($39,000 - $8,100 - $9,720)	21,180
Overheads applied ($8,100 * 120%)	9,720
Work in Process	39,000

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