Data P3-1:
Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basis
of direct materials used in production (not on the basis of raw materials purchased). In computing
a predetermined overhead rate at the beginning of the year, the company's estimates were: manufacturing
overhead cost, $800,000; and direct materials to be used in production. $500,000. The company has
provided the following data:
GITANO PRODUCTS
Estimates for predetermined overhead rate
Manufacturing overhead cost	$800,000
Direct materials cost	$500,000
Inventory:
	Beginning	Ending
Raw materials	$20,000	$80,000
Work in process	150,000	70,000
Finished goods	260,000	400,000
Actual costs incurred:
Purchase of raw materials (all direct)	$510,000
Direct labor cost	90,000
Manufacturing overhead costs:
Indirect labor	170,000
Property taxes	48,000
Depreciation of equipment	260,000
Maintenance	95,000
Insurance	7,000
Rent, building	180,000
Job 215:
Direct Materials	$8,500
Direct labor costs	$2,700
% above cost to manufacture	25%
Direct materials	$24,000
Direct labor	?
Manufacturing overhead	?
Work in process inventory	$70,000
Required:
1. a. Compute the predetermined overhead rate for the year.
b. Compute the amount of under-or overapplied overhead for the year.
2. Prepare a schedule of cost of goods manufactured for the year.
3. Compute the Cost of Goods Sold for the year. (Do not include any under-or overapplied
overhead in your cost of goods sold figure). What options are available for disposing of under-
or overapplied overhead?
4. Job 215 was started and completed during the year. What price would have been charged to
the customer if the job required $8,500 in direct materials and $2,700 in direct labor cost and
the company priced its jobs at 25% above the job's cost according to the accounting system?
5. Direct materials made up $24,000 of the $70,000 ending Work in Process inventory balance.
Supply the missing information.