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 $800,000 of manufacturing overhead for an estimated allocation base of $500,000 direct material dollars to be used in production. The company has provided the following actual data for the just completed year: Purchase of raw materials Direct labor cost Required: Manufacturing overhead costs: Indirect labor Property taxes Depreciation of equipment Maintenance Insurance.. Rent, building Raw Materials Work in Process Finished Goods $510,000 $90,000 $170,000 $48,000 $260,000 $95,000 $7,000 $180,000 Beginning Ending $20,000 $80,000 $150,000 $70,000 $260,000 $400,000 a. Compute the predetermined overhead rate for the year. b. Compute the amount of underapplied or overapplied overhead for the year. 2. Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials.
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 $800,000 of manufacturing overhead for an estimated allocation base of $500,000 direct material dollars to be used in production. The company has provided the following actual data for the just completed year: Purchase of raw materials Direct labor cost Required: Manufacturing overhead costs: Indirect labor Property taxes Depreciation of equipment Maintenance Insurance.. Rent, building Raw Materials Work in Process Finished Goods $510,000 $90,000 $170,000 $48,000 $260,000 $95,000 $7,000 $180,000 Beginning Ending $20,000 $80,000 $150,000 $70,000 $260,000 $400,000 a. Compute the predetermined overhead rate for the year. b. Compute the amount of underapplied or overapplied overhead for the year. 2. Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text: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 $800,000 of manufacturing overhead for
an estimated allocation base of $500,000 direct
material dollars to be used in production. The
company has provided the following actual data for
the just completed year:
Purchase of raw materials
Direct labor cost
Required:
Manufacturing overhead costs:
Indirect labor
Property taxes
Depreciation of equipment
Maintenance
Insurance..
Rent, building
Raw Materials
Work in Process
Finished Goods
$510,000
$90,000
$170,000
$48,000
$260,000
$95,000
$7,000
$180,000
Beginning
$20,000
$150,000
$260,000
Ending
$80,000
$70,000
$400,000
a. Compute the predetermined
overhead rate for the year.
Compute the amount of
underapplied or overapplied
overhead for the year.
2. Prepare a schedule of cost of goods
manufactured for the year. Assume all raw
materials are used in production as direct
materials.
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