Question

For Question 5, I am looking for the cost of direct materials, direct labor, manufacturing overhead, and work in process inventory.

Problem 3-14 Schedule of Cost of Goods Manufactured; Overhead Analysis (LO3-3, LO3-4] 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 $111,600 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: Purchase of raw materials Direct labor cost Manufacturing overhead costs: Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building $ 138,000 $ 89,000 $ 100,000 $ 8,600 $ 15,000 $ 14,000 $ 9,000 $ 37,000 Raw Materials Work in Process Finished Goods Beginning Ending $ 27,000 $ 16,000 $ 46,000 $ 38,000 $ 74,000 $ 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 $38,000 ending balance in Work in Process includes $8,100 of direct materials. Given this assumption, supply the information missing below:

Answer 1

Required 1:

Pre-determined overhead rate = Estimated manufacturing overhead / Direct material dollars to be used in production

= $111,600 / $93,000

= $1.20 per direct material used

Required 2:

Manufacturing overhead applied (Direct material used * overhead rate) ($149,000 * $1.20)	$178,800
Actual manufacturing overhead incurred	$183,600
Underapplied overheads (183,600 - 178,800)	$4,800

Direct material used:

Beginning raw material	$27,000
(+) Purchases	$138,000
(-) Ending raw material	($16,000)
Direct material used	$149,000

Required 3: Cost of goods manufactured

Direct materials:
Beginning raw materials	$27,000
(+) Purchases	$138,000
Total raw material available	$165,000
(-) Ending raw material	($16,000)
Raw material used in production		$149,000
Direct labor cost		$89,000
Manufacturing overheads applied		$178,800
Total manufacturing cost		$416,800
(+) Beginning WIP		$46,000
(-) Ending WIP		($38,000)
Cost of goods manufactured		$424,800

Required 4: Cost of goods sold:

Cost of goods manufactured	$424,800
(+) Beginning FG inventory	$74,000
(-) Ending FG inventory	($58,000)
Unadjusted cost of goods sold	$440,800

Required 5:

Direct material	$8,100
Direct labor (Bal figure)	$20,180
Manufacturing overheads (8,100 * $1.20)	$9,720
WIP inventory	$38,000