Reference no: EM132590993

Bakersville 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:

                                 Beginning Balance                Ending Balance

Raw materials                    $14,000                            $22,000

Work in process                  $27,000                             $9,000

Finished goods                       $62,000                          $77,000

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 33,000 machine-hours and incur $231,000 in manufacturing overhead cost.

The following transactions were recorded for the year:

1. Raw materials were purchased, $315,000.
2. Raw materials were requisitioned for use in production, $307,000 ($281,000 direct and $26,000 indirect).
3. The following employee costs were incurred: direct labor, $377,000; indirect labor, $96,000; and administrative salaries, $172,000.
4. Selling costs, $147,000.
5. Factory utility costs, $10,000.
6. Depreciation for the year was $127,000 of which $120,000 is related to factory operations and $7,000 is related to selling, general, and administrative activities.
7. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,000 machine-hours.
8. Sales for the year totaled $1,253,000.

Required:

Question 1: schedule of cost of goods manufactured.

Question 2: Was the overhead underallocated or overallocated? By how much?

Question 3: income statement for the year. The company closes any underallocated or overallocated overhead to Cost of Goods Sold.