Question

Please hep me solve this thank you!

Tevebaugh Corporation is a manufacturer that uses job-order costing. The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year. The company has supplied the following data for the just completed year:

Beginning inventories:
Finished goods	$	30,000
Estimated total manufacturing overhead at the beginning of the year	$	568,000
Estimated direct labor-hours at the beginning of the year		32,000	direct labor-hours

Results of operations:

Raw materials (all direct) requisitioned for use in production	$	501,000
Direct labor cost	$	683,000
Actual direct labor-hours		33,000	direct labor-hours
Manufacturing overhead:
Indirect labor cost	$	176,000
Other manufacturing overhead costs incurred	$	420,000
Selling and administrative:
Selling and administrative salaries	$	219,000
Other selling and administrative expenses	$	346,000
Cost of goods manufactured	$	1,567,000
Sales revenue	$	2,498,000
Cost of goods sold (unadjusted)	$	1,376,000

The net operating income is:

Garrison 16e Rechecks 2017-08-28

Multiple Choice

$892,750

$765,750

$546,750

$1,111,750

Answer 1

C) $546,750

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $568,000 ÷ 32,000 direct labor-hours = $17.75 per direct labor-hour

Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred= $17.75 per direct labor-hour × 33,000 direct labor-hours = $585,750

Actual manufacturing overhead incurred ($176,000 + $420,000)	$596,000
Manufacturing overhead applied to Work in Process	$585,750
Underapplied (overapplied) manufacturing overhead	$10,250

Unadjusted cost of goods sold	$1,376,000
Underapplied (overaplied) overhead	$10,250
Adjusted cost of goods sold	$1,386,250

Sales		$2,498,000
Cost of goods sold (adjusted)		$1,386,250
Gross margin		$1,111,750
Selling and administrative expenses:
Selling and administrative salaries	$219,000
Other selling and administrative expenses	$346,000	$565,000
Net operating income		$546,750