Question
Crawford Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the
Crawford Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning Balance Ending Balance $ Raw materials $ 17,500 19,500 $ Work in process $ 33,750 Finished Goods $ 77,500 11,250 $ 83,750 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 8,250 machine-hours and incur $57,750 in fixed manufacturing overhead cost and $1.60 variable manufacturing overhead per direct machine hour. The following transactions were recorded for the year: 1. Raw materials were purchased on account, $78,750. 2. Raw materials were requisitioned for use in production, $76,750 ($70,250 direct and $6,500 indirect). 3. The following employee costs were incurred: direct labor, $94,250; indirect labor, $24,000; and administrative salaries, $33,000. 4. Advertising expenses incurred, $36,750. 5. Factory utility costs incurred, $18,500. 6. Depreciation for the year was $31,750 of which $30,000 is related to factory operations and $1,750 is related to selling, general, and administrative activities. 7. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 8,500 machine-hours. 8. Over or under applied manufacturing overhead is closed to Cost of Goods Sold. Use the Excel file Ch. 3 tab for your answers. YOU MAY SHOW YOUR WORK WITH A FORMULA. A FULL SCHEDULE IS NOT REQUIRED. a. Calculate the predetermined overhead rate. (Show your work). b. Calculate the manufacturing overhead applied. (Show your work). c. What was the amount of total manufacturing cost added for the period? (Show your work. You may use a formula. A full schedule is not required.) d. Calculate the cost of goods manufactured for the period. (Show your work. You may use a formula. A full schedule is not required). e. What is the amount of the cost of goods available for sale? (Show your work. You may use a formula. A full schedule is not required). f. Use a t-account to show the actual and applied manufacturing overhead costs for the period. Label the elements. Abbreviations are acceptable provided that they are clear, ie. POR predetermined overhead rate.) g. Was the overhead underapplied or overapplied? By how much? h. What journal entry would be made to dispose of the manufacturing overhead account balance? The journal entry must be written in proper format to receive credit for the answer. i. What will be the amount of the adjusted cost of goods sold? (Show your work. You may use a formula. A full schedule is not required) j. Compute the amount of Selling and Administrative costs for the period. List which costs are included in your answer.
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