1.a. Compute the predetermined overhead rate for the yearb. Compute the amount of under-or over-applied overhead for the year.1.Prepare the statement of cost of goods manufactured for the year.2.Compute the Cost of Goods Sold for the year. (Do not include the under-or over-applied overhead in the cost of goods sold.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Problem #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.) In computing a predetermined overhead rate at the beginning of the year, the company’s estimates were: manufacturing overhead cost, $800,000; and direct materials to be used in production, $500,000. The company has provided the following data :BeginningEndingRaw materials$20,000$80,000Work in Process150,00070,000Finished Goods260,000400,000The following actual costs were incurred during the year:Purchase of direct raw materials $510,000Direct labor cost90,000Manufacturing overhead costs:
 
4Indirect labor170,000Property taxes48,000Depreciation-equipment260,000Maintenance95,000Insurance7,000Rent -Building180,000Required: 1.a. Compute the predetermined overhead rate for the yearb. Compute the amount of under-or over-applied overhead for the year.1.Prepare the statement of cost of goods manufactured for the year.2.Compute the Cost of Goods Sold for the year. (Do not include the under-or over-applied overhead in the cost of goods sold.) What options are available for disposing of under-or over-applied overhead?3.Job 215 was started and completed during the year. What price would have been charged to customer if the job required $8,500 in direct materials and $2,700 in direct labor cost and the company priced its jobs at 25% above the job’s cost to absorb period cost as well as provide for profit?4.If direct materials made up $24,000 of the ending work in process inventory balance. How much is the direct labor cost and the manufacturing overhead?
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