Chapter 3, Problem 14P

Schedule of Cost of Goods Manufactured; Overhead Analysis 103-3, L03-4
Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basis of direct materials used in production (nor on the basis of raw materials purchased). Its predetermined overhead rate was based on a cost formula that estimated $800000 ofmanufacturing overhead for an estimated allocation base of $500,000 direct material dollars to be used in production The Company hasprovided the following data for the just completed year

1. Compute the predetermined rate for the year.
2. Compute the amount of under applied or over appliedoverhead for the year.
3. Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials.
4. Compute the unadjusted cost of goods sold for the ear. Do not include any under applied or over appliedoverhead in your answer. What options are over appliedfor disposing ofunder applied or over applied overhead?
5. Assume that the $70,000 ending balance in Work in process includes $24, 000 of direct materials. Given this assumption, supply the information missing below.