Question

Tevebaugh Corporation is a manufacturer that uses job-order costing. The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year. The company has supplied the following data for the just completed year:

Beginning inventories:
Finished goods	$	30,000
Estimated total manufacturing overhead at the beginning of the year	$	568,000
Estimated direct labor-hours at the beginning of the year		32,000	direct labor-hours

Results of operations:

Raw materials (all direct) requisitioned for use in production	$	501,000
Direct labor cost	$	683,000
Actual direct labor-hours		33,000	direct labor-hours
Manufacturing overhead:
Indirect labor cost	$	176,000
Other manufacturing overhead costs incurred	$	420,000
Selling and administrative:
Selling and administrative salaries	$	219,000
Other selling and administrative expenses	$	346,000
Cost of goods manufactured	$	1,567,000
Sales revenue	$	2,498,000
Cost of goods sold (unadjusted)	$	1,376,000

The net operating income is:

Answer 1

	overhead rate
	568000/32000
	17.75
	Actual manufacturing overhead incurred
	indirect labor cost				176,000
	other manufacturing overhead cost				420,000
	total actual MOH					596,000
	MOH applied		33000*17.75=			585750
	overhead under applied					10,250
	Net operating income
	sales					2,498,000
	unadjusted cost of goods sold				1,376,000
	Add:under applied overhead				10,250	1,386,250
	Gross profit					1,111,750
	less:Selling and adminitrative expenses
	Selling and administrative salaries				219,000
	other selling and administrative expense				346,000	565,000
	Net operating income					546,750	answer