PROBLEM 3-14 Schedule of Cost of Goods Manufactured: Overhead Ana Gitano Product

Question

PROBLEM 3-14 Schedule of Cost of Goods Manufactured: Overhead Ana 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 prede termined overhead rate was based on a cost formula that estimated $800.000 of manufacturing Analysis LO3-3. LO3-4 an estimated allocation base of 0,0o direct material dollars to oany has provided the following data for the just completed year 5 10,000 tion. The $48,0oo $260,o00 $95,00o $7,00O Beginning Ending BO,000 Work in Requiret What options are available for disposing of underap 5 Assume that the $70,000 ending balance in Work in rials. Given this assumption, supply the information 24.000

Explanation / Answer

Q 2

Q3

Q4

Options for disposal of under- or over-applied Overheads:

a. Under- or over-applied overhead could be allocated among Work-in-Process, Finished Goods or Cost of Goods Sold in proportion to the overhead applied during the current period in the ending balances of these accounts; or

b. Under- or over-applied overhead could be closed directly to Cost of Goods Sold

Q5

Q (1) Amount $ i Estimated Manufacturing Overhead        8,00,000 ii Estimated Direct Materials        5,00,000 Answer Pre-determined Overhead rate (i/ii) 160%

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