Gitano Products uses job-order costing and applies overhead cost to jobs based on direct materials used in production (not on the basis of raw materials purchased). Its predetermined overhead rate is based on a cost formula that estimated $139,500 of manufacturing overhead for an estimated allocation base of $93,000 direct material dollars to be used in production. The company provided the following data for the just completed year: Purchase of raw materials Direct labor cost Manufacturing overhead costs: Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building Raw Materials I Work in Process Finished Goods Beginning $ 26,000 $ 47,000 $ 73,000 $ 137,000 $ 89,000 $ 143,300 $8,000 $ 17,000 $ 16,000 $9,600 $ 33,000 Ending $ 14,000 $ 37,000 $ 55,000 Required: 1. Compute the predetermined overhead rate. 2. Compute the amount of underapplied or overapplied overhead. 3. Prepare a schedule of cost of goods manufactured. Assume all raw materials are used in production as direct materials. 4. Compute the unadjusted cost of goods sold. Do not include any underapplied or overapplied overhead in your answer. 5. Assume the $37,000 ending balance in Work in Process includes $8,300 of direct materials. Given this assumption, supply the information missing below:
Gitano Products uses job-order costing and applies overhead cost to jobs based on direct materials used in production (not on the basis of raw materials purchased). Its predetermined overhead rate is based on a cost formula that estimated $139,500 of manufacturing overhead for an estimated allocation base of $93,000 direct material dollars to be used in production. The company provided the following data for the just completed year: Purchase of raw materials Direct labor cost Manufacturing overhead costs: Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building Raw Materials I Work in Process Finished Goods Beginning $ 26,000 $ 47,000 $ 73,000 $ 137,000 $ 89,000 $ 143,300 $8,000 $ 17,000 $ 16,000 $9,600 $ 33,000 Ending $ 14,000 $ 37,000 $ 55,000 Required: 1. Compute the predetermined overhead rate. 2. Compute the amount of underapplied or overapplied overhead. 3. Prepare a schedule of cost of goods manufactured. Assume all raw materials are used in production as direct materials. 4. Compute the unadjusted cost of goods sold. Do not include any underapplied or overapplied overhead in your answer. 5. Assume the $37,000 ending balance in Work in Process includes $8,300 of direct materials. Given this assumption, supply the information missing below:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
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 uses job-order costing and applies overhead cost to jobs based on direct materials used in production (not on the
basis of raw materials purchased). Its predetermined overhead rate is based on a cost formula that estimated $139,500 of
manufacturing overhead for an estimated allocation base of $93,000 direct material dollars to be used in production. The company
provided the following data for the just completed year:
Purchase of raw materials
Direct labor cost
Manufacturing overhead costs:
Indirect labor
Property taxes
Depreciation of equipment
Maintenance
Insurance
Rent, building
Raw Materials
Work in Process
Finished Goods
Beginning
$ 26,000
$ 47,000
$ 73,000
$ 137,000
$ 89,000
$ 143,300
$ 8,000
$ 17,000
$ 16,000
$ 9,600
$ 33,000
Ending
$ 14,000
$ 37,000
$ 55,000
Required:
1. Compute the predetermined overhead rate.
2. Compute the amount of underapplied or overapplied overhead.
3. Prepare a schedule of cost of goods manufactured. Assume all raw materials are used in production as direct materials.
4. Compute the unadjusted cost of goods sold. Do not include any underapplied or overapplied overhead in your answer.
5. Assume the $37,000 ending balance in Work in Process includes $8,300 of direct materials. Given this assumption, supply the
information missing below:
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