Managerial Accounting: P23-2A Gitano Products operates a job-order costing system

Managerial Accounting
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). All materials are classified as direct materials. In computing the predetermined overhead rate at the beginning of the year, the company's estimates were: manufacturing overhead cost, $800,000; and direct materials to be used in production, $500,000. The company has provided the following data in the form of an Excel worksheet:
Inventory: Beginning Ending
Raw materials 20,000 80,000
Work in process 150,000 70,000
Finished goods 260,000 400,000

Actual costs incurred:
Purchase of raw materials (all direct) 510,000
Direct labor cost 90,000
Manufacturing overhead costs:
Indirect labor 170,000
Property taxes 48,000
Depreciation of equipment 260,000
Maintenance 95,000
Insurance 7,000
Rent, building 180,000

Job 215:
Direct materials 8,500
Direct labor cost 2,700
% above job cost according to the
accounting system 0

1. Compute the following:
a. Predetermined overhead rate for the year.
b. The amount of underapplied and overapplied overhead for the year.
2. Prepare a schedule of cost of goods manufactured for the year.
3. Compute the cost of goods sold for the year. (Do not include any underapplied or overapplied overhead in your cost of goods sold figure.) What options are available for disposing of underapplied or overapplied overhead?
4. Job 215 was started and completed during the year. What price would have been charged to the customer if the job required $8,500 in direct materials and $2,700 in direct labor cost and the company price its job at 25% above the job's cost according to the accounting system?
5. Direct materials made up $24,000 of the $70,000 work in process inventory balance. Supply the information missing below:
Direct materials 24,000
Direct labor hours ?
Manufacturing overhead ?
Work in process inventory 70,000
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