Chapter 3 Wong, Singh 81 Campbell Inc. produces a wide range of specialized chemical products. The direct material, compound # IZXC, used in the production of all their products is highly sensitive and must be used in the exact in quantity and be of the highest quality. If there are defects in the product due to the slightest defect in the direct materials or mis measurement of the quantity of direct materials, the entire job must be scrapped. Therefore, most of the manufacturing overhead incurred is to inspect the quantity and quality of the direct materials before they are inputted into the manufacturing process. As a result, the company applies manufacturing overhead on the basis of the dollar value of direct materials used [not on the basis of raviir materials purchased}. To compute the predetermined manufacturing overhead rate the company has estimated the following: - Manufacturing overhead $550,000 I[ consists mainly of quality control inspection of direct materials before they are inputted to the production proess] - Dollar value of direct materials to be used in production $500,000 The company's inventory accounts at the start of the year are as follows: Beginning Ending Raw materials [ all direct] 30,000 20,000 Work in process 70,000 150,000 Finished goods 400,000 260,000 The following ACTUAL costs were incurred during the year: Purchases of raw materials{ all direct} 510,000 Direct labour cost 90000 Indirect labour [ quality inspectors] 625000 Property taxes factory 20000 Depreciation of factory equipment 23000 Maintenance of factory 30000 Insurance for factory 15J000 Factory rent Depreciation- delivery trucI-zs Sales salaries REQUIRED: 1. Compute the predetermined overhead rate for the year. 2. Job 215 was started and completed during the year. What price would have been charged to customers ifthejob required $8500 in direct materials and $2300 in direct labour cost and the company priced itsjobs at total manufacturing cost plus 40%? 3. Compute the amount of over or under applied overhead for the year. 4. Prepare a schedule of cost of goods sold for the year [ Use the actual manufacturing overhead to complete your answer . In other words, do not include the over or under applied overhead in your cost of goods sold figure} 5. At the end of the year Job it 00? was incomplete and was valued at 5150000. To date, the money spent on direct materials was $48,000 and manufacturing overhead was applied { or charged } to Job I? 00? using the predetermined overhead rate which you calculated. Supply the information missing below. WORK IN PROCESS - ENDING Direct materials $48,000 Direct labour ?? Manufacturing overhead i applied} 7'? Total WI P $150,000