Question
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year: |
Machine-hours | 83,000 | |
Fixed manufacturing overhead cost | $ | 1,274,000 |
Variable manufacturing overhead per computer-hour | $ | 3.20 |
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During the year, a glut of furniture on the market resulted in cutting back production and a buildup of furniture in the companys warehouse. The companys cost records revealed the following actual cost and operating data for the year: |
Machine-hours | 50,000 | |||
Manufacturing overhead cost | $ | 992,000 | ||
Inventories at year-end: | ||||
Raw materials | $ | 450,000 | ||
Work in process (includes overhead applied of 55,650) | $ | 170,000 | ||
Finished goods (includes overhead applied of 204,050) | $ | 1,040,000 | ||
Cost of goods sold (includes overhead applied of 667,800) | $ | 2,780,000 | ||
1.)
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