Reference no: EM132595485

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:

Question a. Compute the predetermined overhead rate for the year

Question b. Compute the amount of under- or over-applied overhead for the year.

Question 1. Prepare the statement of cost of goods manufactured for the year.

Question 2. 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?

Question 3. 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?

Question 4. 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?