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 $139,500 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	$	138,000
Direct labor cost	$	89,000
Manufacturing overhead costs:
Indirect labor	$	141,800
Property taxes	$	8,200
Depreciation of equipment	$	15,000
Maintenance	$	14,000
Insurance	$	11,800
Rent, building	$	36,000

	Beginning		Ending
Raw Materials	$	22,000	$	11,000
Work in Process	$	45,000	$	35,000
Finished Goods	$	71,000	$	56,000

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 $35,000 ending balance in Work in Processincludes $8,700 of direct materials. Given this assumption, supplythe information missing below:

Complete this question by entering your answersin the tabs below.

• Required 1

Compute the predetermined overhead rate for the year.

	Predetermined overhead rate %

Complete this question by entering your answersin the tabs below.

• Required 1
• Required 2
• Required 3
• Required 4
• Required 5

Prepare a schedule of cost of goods manufactured for the year.Assume all raw materials are used in production as directmaterials.

Gitano Products Schedule of Cost of GoodsManufactured Beginning work in processinventory $45,000 Direct materials: Beginning raw materials inventory Add: Purchases of raw materials Total raw materials available Less: Ending raw materialsinventory    Direct materials used inproduction $149,000 Direct labor 89,000 Manufacturing overhead applied to workin process 208,600 Total manufacturing costs added toproduction Total manufacturing costs to accountfor 45,000 Less: Ending work in processinventory 35,000 Cost of goods manufactured

Assume that the $35,000 ending balance in Work in Processincludes $8,700 of direct materials. Given this assumption, supplythe information missing below:

	Direct materials $8,700 Direct labor Manufacturing overhead Work in process inventory $35,000

Compute the unadjusted cost of goods sold for the year. Do notinclude any underapplied or overapplied overhead in youranswer.

	Unadjusted cost of goods sold