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Grands Company operates a job order costing system and applies overhead costs on the basis of direct labor cost. Its predetermined overhead rate is based
Grands Company operates a job order costing system and applies overhead costs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $330,000 of manufacturing overhead for an estimated activity level of $200,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials$25,000 Work in process$10,000 Finished Goods$40,000 During the year, the following transactions were completed: a. Raw materials purchased for cash, $275,000. b. Raw materials used in production, $280,000 (materials costing $220,000 were charged directly to jobs; the remaining materials were indirect). c. Cash paid to employees as follows: Direct Labor$180,000 Indirect Labor$72,000 Sales Commissions$63,000 Administrative Salaries$90,000 d. Cash paid for rent during the year was $18,000 ($13,000 of this amount related to factory operations, and the remainder related to selling and administrative activities). e. Cash paid for utility costs in the factory, $57,000. f. Cash paid for advertising, $140,000. g. Depreciation recorded on equipment, $100,000 (88,000 of this amount related to equipment used in factory operations; the remaining $12,000 related to equipment used in selling and administrative activities). h. Manufacturing overhead cost was applied to jobs, $__?__. i. Work in process ending balance is determined to be 92,000. j. Sales for the year (all paid in cash) totaled $1,250,000. The finished goods inventory was determined to be at 15,000 at the end of the period. 1 Determine predetermined overheadrate (only). 2Compute how much indirect materials goes to actual manufacturing overhead. 3How much is total direct labor? 4Determine total manufacturing overheadapplied to jobs. 5Prepare a schedule of cost of goods manufactured. 6How much is the total cost of goods manufactured? 7How much is unadjusted Cost of Goods Sold? 8Determine the total actual manufacturing overhead. 9How much is the adjusted cost of goods sold? 10Compute total selling and administrative expenses. 11Assuming the selling price per unit is $25, how many products were sold during the period? 12Prepare an income statement in the traditional format. 13How much is Net Operating Income? 14How much is Gross Margin
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