Custom Automobile Restoration Shop (CARS) is a small shop dedicated to high-quality restorations of vintage cars. Although it will restore an automobile that a customer already owns, usually the shop buys an old vehicle, restores it, and then sells it in a private party sale or at a classic-car auction. The shop has been in existence for 10 years, but for the sake of simplicity, assume it has no beginning inventories for 2017. Five automobile restoration projects were worked on during 2017. By the end of the year, four of these projects were complete and three of them had been sold The following selected data are from CARS' 2017 budget: Advertising Direct materials $11,140 202,500 182,300 Direct labor Rent on office space Rent on factory space Indirect materials Maintenance costs for factory equipment Utilities costs for office space Utilities costs for factory space Depreciation on factory equipment Machine hours expected to be worked Direct labor hours expected to be worked 10,200 30,600 15,300 5,100 1,900 4,000 12,000 4,000 6,500 The following information relates to production events during 2017: Raw materials were purchased for $207,500. Materials used in production totaled $200,400; $15,200 of these were considered indirect materials costs. The remaining $185,200 of direct materials costs related to individual restoration jobs as follows: Raw materials were purchased for $207,500. Materials used in production totaled $200,400; $15,200 of these were considered indirect materials costs. The remaining $185,200 of direct materials costs related to individual restoration jobs as follows: Direct Materials Job Number Cost 701 $42,400 34,700 41,100 38,800 28,200 702 703 704 705 Labor costs incurred for production totaled $176,700. The workers are highly skilled craftsmen who require little supervision. Therefore, all of these costs were considered direct labor costs and related to individual restoration jobs as follows: Direct Labor Job Number Cost $39,200 701 702 41,100 47,300 29,600 19,500 703 704 705 Paid factory rent of $29,00o. Recorded depreciation on factory equipment of $12,500. Made $5,500 of payments to outside vendors for maintenance of factory equipment Paid factory utilities costs of $4,100. Applied manufacturing overhead using a predetermined rate of $17.00 per machine hour. The 3,760 machine hours that were used relate to each job as follows: Machine Hours Worked Job Number Job Number Hours Worked 701 770 702 820 703 890 704 870 705 410 Completed all restoration jobs except Job 705 and transferred those projects to finished goods Sold three jobs for the following amounts: Sales Price Job Number 701 $128,500 120,700 702 703 113,100 Closed the Manufacturing Overhead account to transfer any overapplied or underapplied overhead to the Cost of Goods Sold account. Required a. Assume CARS had used direct labor hours (versus machine hours) as its cost driver. Compute its predetermined overhead rate. (Round your answer to 2 decimal places.) b. Determine the ending balance in Raw Materials Inventory. c. Determine the ending balance in Finished Goods Inventory. d. Determine the ending balance in Work in Process Inventory. e. Determine the costs of goods manufactured. f. Determine the amount of Cost of Goods Sold. g. Determine the amount of gross margin that was earned on Jobs 701, 702, and 703 h. Determine the amount of overapplied or underapplied overhead that existed at the end of the year (For all requirements, round your intermediate calculations to 2 decimal places.) |(For all requirements, round your intermediate calculations to 2 decimal places.) a. Predetermined overhead rate per hour b. Ending balance in Raw materials c. Ending balance in Finished goods inventory d. Ending balance in Work in process inventory Cost of goods manufactured . f. Cost of goods sold Gross margin for job 701 g. Gross margin for job 702 Gross margin for job 703 h. Over or underapplied overhead
