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:
- Raw materials were purchased, $315,000.
- Raw materials were requisitioned for use in production, $307,000 ($281,000 direct and $26,000 indirect).
- The following employee costs were incurred: direct labor, $377,000; indirect labor, $96,000; and administrative salaries, $172,000.
- Selling costs, $147,000.
- Factory utility costs, $10,000.
- 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.
- Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,000 machine-hours.
- 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.