Gitano Products operates a job-order costing system and appliesoverhead cost to jobs on the basis of direct materials used inproduction (not on the basis of raw materialspurchased). Its predetermined overhead rate was based on a costformula that estimated $120,900 of manufacturing overhead for anestimated allocation base of $93,000 direct material dollars to beused in production. The company has provided the following data forthe just completed year:
| | |
| Purchase of raw materials | $ | 136,000 |
| Direct labor cost | $ | 89,000 |
| Manufacturing overhead costs: | | |
| Indirect labor | $ | 97,800 |
| Property taxes | $ | 9,000 |
| Depreciation of equipment | $ | 20,000 |
| Maintenance | $ | 15,000 |
| Insurance | $ | 11,500 |
| Rent, building | $ | 37,000 |
|
| Beginning | Ending |
| Raw Materials | $ | 23,000 | $ | 16,000 |
| Work in Process | $ | 48,000 | $ | 38,000 |
| Finished Goods | $ | 74,000 | $ | 60,000 |
|
Required:
1. Compute the predetermined overhead rate for the year.
2. Compute the amount of underapplied or overapplied overheadfor the year.
3. Prepare a schedule of cost of goods manufactured for theyear. Assume all raw materials are used in production as directmaterials.
4. Compute the unadjusted cost of goods sold for the year. Donot include any underapplied or overapplied overhead in youranswer.
5. Assume that the $38,000 ending balance in Work in Processincludes $9,000 of direct materials. Given this assumption, supplythe information missing below:
