In: Accounting
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 $120,400 of manufacturing overhead for an estimated allocation base of $86,000 direct material dollars to be used in production. The company has provided the following data for the just completed year:
Purchase of raw materials $ 139,000
Direct labor cost $ 82,000
Manufacturing overhead costs:
Indirect labor $ 129,200
Property taxes $ 9,000
Depreciation of equipment $ 16,000
Maintenance $ 12,000
Insurance $ 11,700
Rent, building $ 39,000
Beginning | Ending | |
Raw Material | $ 27,000 | $ 14,000 |
Work in Process | $ 47,000 | $ 37,000 |
Finished Goods | $ 68,000 | $ 59,000 |
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 $8,400 of direct materials. Given this assumption, supply the information missing below:
1) | |
Total estimated manufacturing overheads (a) | $120,400 |
Total estimated Direct materials to be used (b) | $86,000 |
Predetermined overhead rate (a/b*100) | 140% |
2) | |
Beginning raw materials | $27,000 |
Add: Purchase of raw materials | $139,000 |
Total cost of raw materials available for use | $166,000 |
Less: Ending raw materials | ($14,000) |
Direct materials used | $152,000 |
Manufacturing overheads applied ($152,000*140/100) | $212,800 |
Actual manufacturing overheads: | |
Indirect labor | $129,200 |
Property taxes | $9,000 |
Depreciation of equipment | $16,000 |
Maintenance | $12,000 |
Insurance | $11,700 |
Rent, building | $39,000 |
Total Actual Manufacturing Overhead costs | $216,900 |
The applied manufacturing overheads of $212,800 is less than the actual manufacturing oveheads of $216,900, the overheads are underapplied by $4,100 ($216,900 - $212,800). | |
Therefore - | |
Underapplied overheads are $4,100. | |
3) | |
Direct materials used | $152,000 |
Direct labor | $82,000 |
Manufacturing overheads | $216,900 |
Total manufacturing costs | $450,900 |
Add: Beginning work in process inventory | $47,000 |
Less: Ending work in process inventory | ($37,000) |
Cost of goods manufactured | $460,900 |
4) | |
Cost of goods manufactured | $460,900 |
Add: Beginning Finished goods inventory | $68,000 |
Less: Ending finished goods inventory | ($59,000) |
Unadjusted cost of goods sold | $469,900 |
The 5th sub part is incomplete as the data given below is missing. Please provide it under comments, i will answer it.