.

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). Its predetermined overhead rate was based on a cost formula that estimated $128,800 of manufacturing overhead for an estimated allocation base of $92,000 direct material dollars to be used in production. The company has provided the following data for the just completed year:

Purchase of raw materials	$	138,000
Direct labor cost	$	88,000
Manufacturing overhead costs:
Indirect labor	$	127,600
Property taxes	$	8,900
Depreciation of equipment	$	16,000
Maintenance	$	12,000
Insurance	$	9,300
Rent, building	$	33,000

Beginning

Ending

Raw Materials

$

22,000

$

15,000

Work in Process

$

46,000

$

38,000

Finished Goods

$

70,000

$

58,000

-a.	Compute the predetermined overhead rate for the year.

1-b.	Compute the amount of underapplied or overapplied overhead for the year.

2-a.	Compute the unadjusted cost of goods sold for the year. (Do not include any underapplied or overapplied overhead in your cost of goods sold figure.)

Identify the options available for disposing of underapplied or overapplied overhead? (Select all that apply.)

Underapplied or overlapied may be allocated among Work in Process, Finished Goods, and Cost of Goods Sold in proportion to the overhead applied

Underlapped or Overlapied overhead may be closed directly to Finished Goods

Underlapped or overlapied overhead may be allocated between work in Process and Finished Goods

Underlapped or overlapied overhead may be allocated between Finished Goods and cost of goods sold in proportion to the overhead applied

Underlapped or overlapied overhead may be closed directly to work in process

Underlapped or overlapied overhead may be closed directly to cost of goods sold

Underlapped or overlapied overhead may be allocated between work in process and cost of goods sold in proportion to the overhead applied

3.	Job 215 was started and completed during the year. What price would have been charged to the customer if the job required $3,700 in direct materials and $4,500 in direct labor cost and the company priced its jobs at 55% above the jobs cost according to the accounting system?

4.	Direct materials made up $8,700 of the $38,000 ending Work in Process inventory balance. Supply the information missing below:

Direct Materials	8,700
Direct Labor
Manufacturing Overhead
Work in Process Inventory	38000