Gitano Products operates a job-order costing system and applies overhead cost to

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 $108,000 of manufacturing overhead for an estimated allocation base of $90,000 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: $ 132,000 $ 86,000 Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building $ 83,500 $8,900 $ 19,000 $ 14,000 $ 8,100 $ 38,000 Raw Materials Work in Process Finished Goods Beginning Ending $ 23,000 $ 16,000 $ 48,000 $ 40,000 $ 73,000 $ 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 $40,000 ending balance in Work in Process includes $8,800 of direct materials. Given this assumption, supply the information missing below: Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4Required 5 Compute the amount of underapplied or overapplied overhead for the year. nderapplied overhead

Explanation / Answer

1 Predetermined overhead rate = 108000/90000= 120% 2 Indirect labor 83500 Property taxes 8900 Depreciation of equipment 19000 Maintenance 14000 Insurance 8100 Rent, building 38000 Actual manufacturing overhead costs 171500 Applied manufacturing overhead costs 166800 =139000*120% Underapplied overhead 4700 3 Schedule of Cost of Goods Manufactured Direct materials: Raw materials inventory, beginning 23000 Add: Purchases of raw materials 132000 Total raw materials available 155000 Deduct: Raw materials inventory, ending 16000 Raw materials used in production 139000 Direct labor 86000 Manufacturing overhead applied to work in process inventory 166800 Total manufacturing costs 391800 Add: Beginning work in process inventory 48000 439800 Deduct: Ending work in process inventory 40000 Cost of goods manufactured 399800 4 Finished goods inventory, beginning 73000 Add: Cost of goods manufactured 399800 Cost of goods available for sale 472800 Deduct: Finished goods inventory, ending 58000 Unadjusted cost of goods sold 414800 5 Direct materials 8800 Direct labor 20640 Manufacturing overhead 10560 =8800*120% Work in process inventory 40000

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.