Answer:
Instructions are listed below
Explanation:
Giving the following information:
Applies overhead cost to jobs based on direct materials used in production. Its predetermined overhead rate was based on a cost formula that estimated $130,500 of manufacturing overhead for an estimated allocation base of $87,000 direct material dollars to be used in production.
The company has provided the following data for the just-completed year:
Purchase of raw materials $ 140,000
Direct labor cost $ 83,000
Manufacturing overhead costs:
Indirect labor $ 160,400
Property taxes $ 8,900
Depreciation of equipment $ 15,000
Maintenance $ 11,000
Insurance $ 8,500
Rent, building $ 33,000
Total overhead: 236,800
Inventory:
Beginning Raw Materials $ 26,000
Ending Raw Materials $11,000
Beginning Work in Process $ 49,000
Ending WiP$ 37,000
Beginning Finished Goods $ 71,000
Ending finished goods $ 58,000
1) Predetermined overhead rate= total estimated overhead for the period/ total amount of allocation base
Predetermined overhead rate= 130500/ 87000= $1.5 per direct material used
2) First, we need to determine the allocated overhead:
Direct materials used= beginning inventory + purchases - ending inventory= 26000 + 140000 - 11000= $155,000
Allocated overhead= 1.5* 155,000= $232,500
Under allocation= real overhead - allocated overhead= 232500 - 130500= 102,000 underallocated
3) Cost of goods manufactured:
Beginning WIP= 49,000
Direct materials= 155000
Direct labor= 83000
Manufacuring overhead (allocated)= 130500
Ending WIP= 37000 (-)
Cost of goods manufactured= $380,500
4) Cost of goods sold= beginning finished inventory + Cost of goods manufactured - ending finished inventory
COGS= 71000 + 380500 - 58000= $393,500
