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.

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