Answer and Explanation:
According to the scenario, computation of the given data are as follow:-
1. Predetermined Overhead Rate for a Year
= Estimated Manufacturing Overhead ÷ Estimated Allocation Base Of Direct Material × 100
= $133,500 ÷ $89,000 × 100
= 150%
2. We have a need the value of overhead applied and overhead incurred, to calculate the value of over applied and under applied overhead.
Overhead Applied = (Purchase Of Direct Material + Opening Value of Direct Material - Closing Value of Direct Material) × Predetermined Overhead Rate
= ($139,000 + $27,000 - $13,000) × 150 ÷ 100
= $153,000 × 150 ÷ 100
= $229,500
Overhead Incurred
= Indirect Labor + Property Taxes + Depreciation of Equipment + Maintenance + Insurance + Rent&Building
= 127,800 + 8,880 + 18,000 + 12,000 + 11,300 + 40,000
= $217,980
Over Applied Overhead = Overhead Applied - Overhead Incurred
= $229,500 - $217,980
= $11,520
Overhead applied is more than overhead incurred, so this situation is called over applied overhead.
3. Cost of Goods Manufactured for the Year
Particular Amount ($)
Opening stock of raw material 27,000
Add-purchases of raw material 139,000
Less-closing stock of raw material 13,000
Add-Direct labor 85,000
Add-Manufacturing overhead applied to WIP 229,500
Add-Opening Work in Progress 46,000
Less-closing Work in Progress 36,000
Goods manufacturing cost 477,500
4. Unadjusted Cost of Goods Sold
Particular Amount ($)
Goods manufacturing cost 477,500
Add-finished goods opening stock 71,000
Less-finished goods closing stock 56,000
Cost of goods sold 492,500
