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DACOR 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:
DACOR 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 Ending Balance Balance Raw materials $ 14,000 $ 22,000 Work in process $ 27,000 $ 9,000 Finished Goods $ 62,000 $ 67,000 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 33,000 machine-hours and incur $231,000 in fixed manufacturing overhead cost and $2.25 variable manufacturing overhead per direct machine hour. The following transactions were recorded for the year: 1. Raw materials were purchased on account, $315,000. 2. Raw materials were requisitioned for use in production, $307,000 ($281,000 direct and $26,000 indirect). 3. The following employee costs were incurred: direct labor, $377,000; indirect labor, $96,000; and administrative salaries, $132,000. 4. Advertising expenses incurred, $147,000. 5. Factory utility costs incurred, $70,000. 6. Depreciation for the year was $127,000 of which $120,000 is related to factory operations and $7,000 is related to selling, general, and administrative activities. 7. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,000 machine-hours. 8. Sales on account for the year totaled $1,423,000. 9. Over or under applied manufacturing overhead is closed to Cost of Goods Sold. Required: a. Calculate the predetermined overhead rate. b. Calculate the manufacturing overhead applied. c. Prepare a Schedule of Cost of Goods Manufactured. d. Was the overhead underapplied or overapplied? By how much? e. Prepare a Schedule of Cost of Goods Sold for the month. f. Prepare an Income Statement for the year. (The company closes any underapplied or overapplied overhead to Cost of Goods Sold.) a. Predetermined overhead rate: b. Manufacturing overhead applied
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