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Edit View History Bookmarks People Window Help xt tue To Ematic Sales Of ts So https Baab Corporation is a manufacturing firm that uses job-order c beginning and end of the year osting. The company's Inventory balances were as follows at the 14, 050 $22,050 s 27,050 9,050 62,050 77,050 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the yeart the company estimated that it would work 33,050 machine-hours and incur $234.655 in manufacturing overhead cost. The Raw materials were purchased, $315,050 . The following employee costs were incurred: direct labo, $377050, Indirect labor $96,050, and administrative salaries, . Factory utility costs, $10.050 Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,010 machine-hours following transactions were recorded for the year Raw materials were requisitioned for use in production, $307050 ($280,950 direct and $26,100 Indirect $172.050 Selling costs, $147,05o Depreciation for the year was $130,000 of which $120,100 is related to factory operations and $9,900 is related to selling. general, and administrative actvities. Sales for the year totaled $1,255,000 Required: Prey 1 of 4 Next 3

Explanation / Answer

Solution A:

Predetermined overhead rate = Estimated manufacturing overhead / Estimated machine hours

= $234,655 / 33050 = $7.10 per machine hour

Solution B:

Manufacturing overhead incurred = Indirect material + Indirect labor + Factory utility cost + Depreciation related to factory operation

= $26,100 + $96,050 + $10,050 + $120,100 = $252,300

Manufacturing overhead applied = $241,471

Underapplied overhead = $252,300 - $241,471 = $10,829

Solution C:

Baab Corporation Schedule of cost of goods manufactured Particulars Details Amount Direct Material: Beginning material inventory $14,050.00 Cost of material purchased $315,050.00 Cost of material available $329,100.00 Less: Ending material inventory $22,050.00 Total material used $307,050.00 Less: Indirect material used $26,100.00 Direct material used $280,950.00 Direct labor $377,050.00 Manufacturing overhead applied (34010 * $7.10) $241,471.00 Total manufacturing cost for the year $899,471.00 Add: Beginning WIP $27,050.00 Total cost of work in process during the year $926,521.00 Less: Ending WIP $9,050.00 Cost of goods manufactured $917,471.00

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