Gitano Products operates a job order costing system and applies overhead cost to

Question

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 estimat $117.600 of manufacturing overhead for an estimated allocation base of $84,000 direct material dollars to be used in production. The company has provided the following data for the just completed year: ed Purchase of raw materials Direct labor cost Manufacturing overhead costs $140,e0e s 8e,eee $131, 5ee $ 8,20e Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent, building 16,eee 13,eee $ 11,see s3e, eee Beginning Ending 24,000 $16,8e Work in Process 46,8e0 $ 37,880 Finished Goods$ 70,ee0 $55,8 Raw Materials 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 $37,000 ending balance in Work in Process includes $8,400 of direct materials. Given this assumption, supply the information missina below

Explanation / Answer

1) Predetermined Overhead Rate :-

= Estimated Manufacturing Overhead / Estimated Direct Materials Cost

= $117600 / $84000

= 140%

2) Direct Materials Used :-

Underapplied or Overapplied Overhead :-

3) Calculation of Cost of goods sold :-

4) Unadjusted Cost of goods sold :-

5) Direct Labor Cost :-

Particulars Amount($) Beginning Rew Materials 24000 Add : Purchase of Raw Materials 140000 Total Raw Materials Available 164000 Less : Ending Raw Materials (16000) Direct Materials Used 148000

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