Please highlight answers! Gitano Products operates a job-order costing system an
ID: 2342215 • Letter: P
Question
Please highlight answers! Gitano Products operates a job-order costing system and applies overhead c ost 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 19,600 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 Purchase of raw materials Direct 1abor cost Manufacturing overhead costs 134,000 88,000 Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building 118,400 $8,000 16,000 $13,000 $9,700 36,000 Work in Process Pinished Goods 29,000 11,000 49,000 39,000 69,000 56,000 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 $39,000 ending balance in Work in Process includes $8,400 of direct materials. Given this assumption, supply the information missing belowExplanation / Answer
1) Predetermined Overhead rate for the year
= Total estimated overhead / Estimated material consumption in dollars
= 119600 / 92000
= 1.3 per dollar of material used
2) Under applied overhead for the year
Note : Direct material consumed = (purchased - 134000) + ( beginning balance of 29000 ) - ( ending balance of 11000) = 152000
Manufacturing OH applied = 152000 dollars * 1.30 per dollar = $ 197600
Required - 3
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Actual Manufacturing OH cost Indirect labor 118400 property taxes 8000 Depreciation 16000 Maintenance 13000 Insurance 9700 Rent, building 36000 Total 201100 (-) Manufacturing OH applied 197600 Under applied Overhead for the year 3500