Question
In: Accounting
Problem 3-14 Schedule of Cost of Goods Manufactured; Overhead Analysis [LO3-3, LO3-4] Gitano Products operates a...
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 $138,000 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 | $ | 139,000 |
| Direct labor cost | $ | 88,000 |
| Manufacturing overhead costs: | ||
| Indirect labor | $ | 157,600 |
| Property taxes | $ | 8,400 |
| Depreciation of equipment | $ | 18,000 |
| Maintenance | $ | 11,000 |
| Insurance | $ | 10,500 |
| Rent, building | $ | 32,000 |
| Beginning | Ending | |||
| Raw Materials | $ | 30,000 | $ | 14,000 |
| Work in Process | $ | 45,000 | $ | 36,000 |
| Finished Goods | $ | 71,000 | $ | 62,000 |
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 $36,000 ending balance in Work in Process includes $8,500 of direct materials. Given this assumption, supply the information missing below:
Solutions
Expert Solution
1. Compute the predetermined overhead rate for the year.
=Estimated total manufacturing overhead/Estimated total amount of the allocation
base
=138000/92000=150%
2. Compute the amount of underapplied or overapplied overhead for the year.
| Raw materials inventory, beginning | 30000 |
| Add, Purchases of raw materia | 139000 |
| Raw materials available | 169000 |
| Deduct: Raw materials inventory, ending | 14000 |
| Raw materials used in production | 155000 |
| Actual manufacturing overhead costs: | |
| Indirect labor | 157600 |
| Property tax | 8400 |
| Depreciation of equipment | 18000 |
| Maintenance | 11000 |
| Insurance | 10500 |
| Rent, building | 32000 |
| Total actual cost | 237500 |
| Applied manufacturing overhead costs 155000*150% | 232500 |
| Underapplied overhead | 5000 |
3. Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials.
| Raw materials inventory, beginning | 30000 | |
| Add, Purchases of raw materia | 139000 | |
| Raw materials available | 169000 | |
| Deduct: Raw materials inventory, ending | 14000 | |
| Raw materials used in production | 155000 | |
| Direct labor | 88000 | |
| Manufacturing overhead applied to work in proces | 232500 | |
| Total manufacturing cost | 475500 | |
| Add: Work in process, beginning | 45000 | |
| Deduct: Work in process, ending | 36000 | |
| Cost of goods manufactured | 484500 |
4. Compute the unadjusted cost of goods sold for the year. Do not include any underapplied or overapplied overhead in your answer.
| Fnished goods inventory, beginning | 71000 |
| Add: Cost of goods manufactured | 484500 |
| Goods available for sale | 555500 |
| Deduct: Finished goods inventory, ending | 62000 |
| Cost of goods sold | 493500 |
5. Assume that the $36,000 ending balance in Work in Process includes $8,500 of direct materials. Given this assumption, supply the information missing below:
| Direct Material | 8500 |
| Direct labor (Bal Fig) | 14750 |
| Overhead 150% of DM | 12750 |
| Work in Progress Given | 36000 |
ekkarill92 answered 2 years agoRelated Solutions
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