Question

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). Its predetermined overhead rate was based on a cost formula that estimated $110,500 of manufacturing overhead for an estimated allocation base of $85,000 direct material dollars to be used in production. The company has provided the following data for the just completed year:

  

Purchase of raw materials	$	131,000
Direct labor cost	$	81,000
Manufacturing overhead costs:
Indirect labor	$	96,400
Property taxes	$	8,800
Depreciation of equipment	$	19,000
Maintenance	$	13,000
Insurance	$	10,500
Rent, building	$	40,000

  

  Beginning

Ending

  Raw Materials

$

24,000

$

13,000

  Work in Process

$

47,000

$

37,000

  Finished Goods

$

70,000

$

58,000

Part 3:

Compute the unadjusted cost of goods sold for the year. (Do not include any underapplied or overapplied overhead in your cost of goods sold figure.)

Part 4:

Job 215 was started and completed during the year. What price would have been charged to the customer if the job required $3,700 in direct materials and $4,700 in direct labor cost and the company priced its jobs at 65% above the job’s cost according to the accounting system? (Round your answer to the nearest dollar.)

Part 5:

Job 215 was started and completed during the year. What price would have been charged to the customer if the job required $3,700 in direct materials and $4,700 in direct labor cost and the company priced its jobs at 65% above the job’s cost according to the accounting system? (Round your answer to the nearest dollar.)

Direct materials	$8,600
Direct labor
Manufacturing overhead
Work in process inventory	$37,000

Answer 1