Reference no: EM132617058
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.) In computing a predetermined overhead rate at the beginning of the year, the company's estimates were: manufacturing overhead cost, $800,000; and direct materials to be used in production, $500,000.
The company has provided the following data :
Beginning Ending
Raw materials $20,000 $80,000
Work in Process 150,000 70,000
Finished Goods 260,000 400,000
The following actual costs were incurred during the year:
Purchase of direct raw materials $510,000
Direct labor cost 90,000
Manufacturing overhead costs:
Indirect labor 170,000
Property taxes 48,000
Depreciation- equipment 260,000
Maintenance 95,000
Insurance 7,000
Rent - Building 180,000
Required:
Problem 1. a. Compute the predetermined overhead rate for the year
b. Compute the amount of under- or over-applied overhead for the year.
Problem 2. Prepare the statement of cost of goods manufactured for the year.
Problem 3. Compute the Cost of Goods Sold for the year. (Do not include the under- or over-applied overhead in the cost of goods sold.) What options are available for disposing of under- or over-applied overhead?
Problem 4. Job 215 was started and completed during the year. What price would have been charged to customer if the job required $8,500 in direct materials and $2,700 in direct labor cost and the company priced its jobs at 25% above the job's cost to absorb period cost as well as provide for profit?
Problem 5. If direct materials made up $24,000 of the ending work in process inventory balance. How much is the direct labor cost and the manufacturing overhead?