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A company's inventory balances were as follows at the beginning and end of the year: Beginning Balance Ending Balance Raw materials Dh14,000 Dh22,000 Work in
A company's inventory balances were as follows at the beginning and end of the year: Beginning Balance Ending Balance Raw materials Dh14,000 Dh22,000 Work in process Dh27,000 Dh9,000 Finished goods Dh62,000 Dh77,000 Overhead costs are applied to jobs based on machine-hours. At the beginning of the year, the company estimated that it would work 33,000 machine-hours and incur Dh231,000 in manufacturing overhead cost. The following transactions were recorded for the year: . Raw materials were purchased, Dh315,000. . Raw materials were requisitioned for use in production, Dh307,000 (Dh281,000 direct and Dh26,000 indirect). . The following employee costs were incurred: direct labor, Dh377,000; indirect labor, Dh96,000; and administrative salaries, Dh172,000. . Selling costs, Dh147,000. . Factory utility costs, Dh10,000. . Depreciation for the year was Dh127,000 of which Dh120,000 is related to factory operations and Dh7,000 is related to selling, general, and administrative activities. . Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,000 machine-hours. . Sales for the year totaled Dh1,253,000. Required: a. Prepare a schedule of cost of goods manufactured. (4 marks) b. Was the overhead underapplied or overapplied? By how much? (1 mark)
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