Question 1Far West Manufacturing Company operates a job-order costing system and appliesoverhead cost to jobs on the basis of direct material cost. Its predetermined overhead ratewas based on a cost formula that estimated $500,000 of manufacturing overhead for anestimated allocation base of $390,625 direct material dollars. The company has providedthe following data in the form of an Excel worksheet:Ending$55,000166,125138,000The following actual costs were incurred during the year:$450,000$119,000Beginning$38,00079,00047,000Raw MaterialsWork in ProcessFinished GoodsPurchase of raw materialsDirect labor costManufacturing overhead costs:Indirect materials104,875102,00035,00032,70041,00023,42549,000Insurance, factoryDepreciation of equipmentIndirect laborProperty taxesMaintenanceRent, buildingRequired:Compute the predetermined overhead rate for the year.Prepare a schedule of cost of goods manufactured for the year.Compute the amount of underapplied or overapplied overhead for the year.4. Prepare a schedule of cost of goods sold for the year. Adjust the underapplied oroverapplied overhead to cost of goods sold.5. Prepare all journal entries related to manufacturing overhead. Besides indirectmaterials, indirect labor and depreciation, all other costs are recorded as accountspayable.66étv

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Answered: Required: Compute the predetermined…

Required: Compute the predetermined overhead rate for the year. Prepare a schedule of cost of goods manufactured for the year. Compute the amount of underapplied or overapplied overhead for the year.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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