Reference no: EM131788116
Question - Baar Company is a manufacturing firm that uses job order costing. The company's inventory balances were as follows at the beginning and end of the year:
Raw materials
-Beginning Balance: $26000
-Ending Balance: $20,000
Work in Process
-Beginning Balance: $71,000
-Ending Balance: $53,000
Finished goods
-Beginning Balance: $66000
-Ending Balance: $81,000
The company applies overhead to jobs using a predetermined overhead rate based on machine hours. At the beginning of the year, the company estimated that it would work 44,000 machine hours and incur $176,000 in manufacturing overhead costs. The following transactions were recorded for the year:
Raw materials purchased $459,000
Raw materials were requisitioned for use in production, $465,000($431,000 direct and $34,000 indirect)
Employee costs incurred: direct labor $296,000; indirect labor $63,000; aministrative salaries $157,000
Selling costs $134,000
Factory utility costs $14,000
Depreciation for the year was $119,000 of which $114,000 related to factory operations and $5,000 related to selling and admin activities
Manufacturing overhead was applied to all jobs. The actual level of activity for the year was 47,000 machine hours
Sales totaled $1,287,000
Prepare schedule of cost of goods manufactured in good form.
Was the overhead under-or overapplied? By how much.
Prepare an income statement for the year in good form. The company closes any under-or overapplied overhead to cost of goods sold.