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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 $109,200 of manufacturing overhead for an estimated allocation base of $91,000 direct material dollars to be used in production. The company has provided the following data for the just completed year:

Purchase of raw materials	$ 138,000
Direct labor cost	$ 87,000
Manufacturing overhead costs:
Indirect labor	$ 91,300
Property taxes	$ 8,700
Depreciation of equipment	$ 19,000
Maintenance	$ 16,000
Insurance	$ 9,100
Rent, building	$ 38,000

	Beginning	Ending
Raw Materials	$ 22,000	$ 11,000
Work in Process	$ 48,000	$ 36,000
Finished Goods	$ 72,000	$ 56,000

Required:

1. Compute the predetermined overhead rate for the year.

2. Compute the amount of underapplied or overapplied overhead 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 year. Do not include any underapplied or overapplied overhead in your answer.

5. Assume that the $36,000 ending balance in Work in Process includes $8,900 of direct materials. Given this assumption, supply the information missing below:

PART ONE

Predetermined overhead rate=%?

PART TWO

Under-applied overhead=

PART THREE

Beginning work in process inventory=

Direct materials=

Beginning raw materials inventory=

Add:Purchases of raw materials

Total raw materials available=

Less: Ending raw materials inventory=

Direct materials used in production=

Direct Labor=

Manufacturing overhead applied to work in process=

Total manufacturing costs added to production=

Total manufacturing costs to account for=

Less:Ending work in process inventory

Costs of goods manufactured=

PART 4

Unadjusted cost of goods sold=

PART 5

Direct materials=8,900

Direct labor=

Manufacturing overhead=

Work in process inventory=36,000

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