# In-class discussion Aug 14_solutions.docx - PROBLEM 314...

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PROBLEM 3–14 Schedule of Cost of Goods Manufactured; Overhead Analysis 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). Its predetermined overhead rate was based on a cost formula that estimated \$800,000 of manufacturing overhead for an estimated allocation base of \$500,000 direct material dollars to be used in production. The company has provided the following data for the just completed year: Purchase of raw materials \$ 510,000 Direct labor cost \$90,000 Manufacturing overhead costs: Indirect labor \$ 170,000 Property taxes \$48,000 Depreciation of equipment \$260,00 0 Maintenance \$95,000 Insurance \$7,000 Rent, building \$ 180,000 Beginnin g Ending Raw Materials \$20,00 0 \$80,00 0 Work in Process \$ 150,000 \$70,00 0 Finished Goods \$260,00 0 \$400,00 0 Required: 1. Compute the predetermined overhead rate for the year. 2. Compute the amount of underapplied or overapplied overhead for the year. 3. Prepare a schedule of cost of goods manufactured for the year.