Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basis of direct materials to be used in production (not on the basis of raw materials purchased). All materials are classified as direct materials. In computing a 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:

Beginning Ending
Raw Materials $20,000 $80,000
Work in Process $150,000 $70,000
Finished Goods $260,000 $400,000

The following actual costs were incurred during the year:


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
References


5.value:
1 points

Problem 2-23A Requirement 1
Requirement 1:
(a) Compute the predetermined overhead rate for the year. (Omit the "%" sign in your response.)

Predetermined overhead rate %

(b)
Compute the amount of underapplied or overapplied overhead for the year. (Input all amounts as positive values. Omit the "$" sign in your response.)

overhead $

Check My WorkeBook Links (4)References


6.value:
2 points

Problem 2-23A Requirement 4
Requirement 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 $2,700 in direct labor cost and the company priced its jobs at 25% above the job's cost according to the accounting system? (Omit the "$" sign in your response.)

Price to customer $
Check My WorkeBook Links (4)References


7.value:
2 points

Problem 2-23A Requirement 5
Requirement 5:
Direct materials made up $24,000 of the $70,000 ending Work in Process inventory balance. Supply the information missing below: (Omit the "$" sign in your response.)


Direct materials $24,000
Direct labor
Manufacturing overhead
Work in process inventory $70,000

We will not solve the problem for you, but we can show how to do it:
1(a) Predetermined rate = Estimated Overheads/Estimated materials usage
1(b) Over/under applied overheads - Applied overheads (Materials used x Overhead rate) minus Actual overheads. Over applied means you have charged more than actual, under applied is obverse of over applied
4. Compute the cost of job as follows:
Materials used - as given
Direct labor - as given
Applied overheads - Materials used x overhead rate
Cost of job = Materials+Labor+overheads
Add: Markup - as stated
Job price

5 Here you have to determine labor cost. You are given total cost. Deduct Materials used + Overheads applied and you get labor cost