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Kayla Inc. uses a job order costing system. Manufacturing overhead is applied on the basis of direct labor cost. Total manufacturing overhead was estimated to
Kayla Inc. uses a job order costing system. Manufacturing overhead is applied on the basis of direct labor cost. Total manufacturing overhead was estimated to be $150,000 for the year; direct labor was estimated to total $300,000. (1/1) (12/31) Raw Materials Inventory $ 20,000 $ 26,000 Work in Process Inventory $ 44,000 $ 38,000 Finished Goods Inventory $ 68,000 $ 82,000 The following transactions have occurred during the year. Raw materials purchases $ 200,000 Administrative Salaries Direct Materials Used Direct labor Indirect materials used Indirect labor Factory equipment depreciation Factory rent Factory utilities Other factory costs Sales Advertising Commissions $ 60,000 $ 182,000 $ 290,000 $ 12,000 $ 30,000 $ 48,000 $ 36,000 $ 15,000 $ 13,000 $ 900,000 $ 50,000 $ 45,000 1. Show your calculations and prepare the following: a. Calculate the predetermined overhead rate. b. Calculate cost of goods manufactured. c. Calculate the over- or underapplied overhead. d. Calculate adjusted cost of goods sold. e. What was the net income for the company? f. Comment on the over or under applied overhead, is the company's use of direct labor dollars giving them good information? Why is it good or not information
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