Question

Der Quiz - Chapter 3 Sird Help Save & Exit Check 6 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 $124,600 of manufacturing overhead for an estimated allocation base of $89,000 direct material dollars to be used in production. The company has provided the following data for the just completed year: Skipped $ 137,000 $ 85,000 Purchase of raw materials Direct labor cost Manufacturing overhead conto Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building $ 130, 600 $ 8,900 $ 17,900 $ 13,000 $ 9,200 $ 33,000 Raw Materials Work in Process Finished Goods Beginning Ending $ 28,000 $ 16,000 $ 48,000 37,000 $ 68,000 $ 58,000 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 $37,000 ending balance in Work in Process includes $8,700 of direct materials. Given this assumption, supply the information missing below: Complete this question by entering your answers in the tabs below.

Answer 1

Predetermined overhead= Estimated overhead/ direct material cost= 124600/89000= $1.4

2. Under/Overapplied overhead

Overhead cost= Indirect labour+property taxes+depreciation+maintainance+insurance+rent= 130600+8900+17000+13000+9200+33000= $211700

• For predetermined overhead, we need to find firect material used in production= Opening material+purchases-Closing material= 28000+137000-16000= $149000. Predetermined overhead= 149000*1.4=$208600
• Overapplied overhead= 211700-208600= $3100

• COST OF GOODS MANUFACTURED

• COST OF GOODS MANUFACTURED	Amount
  Direct material
  Opening	28000
  (+) Purchases	137000
  (-) Closing	-16000
  Direct material used	149000
  Direct Labour	85000
  Factory Overhead
  Indirect Labour	130600
  Property taxes	8900
  Depreciation	17000
  Maintainace	13000
  Insurance	9200
  Rent	33000
  Total Factory overhead	211700
  Total Manufacturing Cost	445700
  Add: Opening WIP	48000
  Less: Closing WIP	-37000
  Cost of goods manufactured	456700

COST OF GOODS SOLD

COST OF GOODS SOLD	Amount
Cost of goods manufactured	456700
Add: Opening Finished goods	68000
Goods available for sale	524700
Less: Closing finished goods	-58000
Cost of goods sold	466700