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1 Palmer Company is a manufacturing firm that uses a job-order costing accounting system. 2 The company uses a Just-in-time purchasing system and therefore does not have any raw materials inventory. 3 The company's inventory balances at the beginning and end of the year were as follows: 4. 5 Beginning Ending 6 Raw Materials S $ 7 Work in process $ 27,000 $ 9,000 8 Finished goods $ 62,000 $ 77,000 9 10 The company applies overhead to jobs using a predetermined overhead rate based on machine hours. 11 At the beginning of the year, the company estimated the following: 12 13 Manufacturing overhead cost $ 225,420 14 Machine hours 33,000 15 16 The following actual transactions and activities were recorded for the year: 17 18 Raw materials purchased and used in production: 19 Direct materials S 281,000 20 Indirect materials $ 26,000 21 Direct labour $ 377,000 22 Indirect labour $ 96,000 23 Administrative salaries $ 172,000 24 Sales salaries $ 147,000 25 Utilities - Factory $ 10,000 26 Depreciation - Factory $ 120,000 27 Depreciation - Selling & Administrative $ 28 Sales $ 1,253,000 29 Machine hours 34,000 30 7,000 31 Required: 32 33 1 (a) Compute the predetermined overhead rate for the year. Imachine hour 34 35 36 1(b) Compute the amount of applied overhead for the year. DIT 37 38 39 1(c) Was the manufacturing overhead underapplied or overapplied? 40 What amount was this balance in manufacturing overhead account? 41 42 2. Prepare a schedule of cost of goods manufactured for the year. 43 44 Palmer Company Schedule of Cost of Goods Manufactured For the year ended xxxxxxx, 20xx 45 46 47 48 49 50 51 52 53 54 55 56 Total manufacturing costs Cost of goods manufactured 42 2. Prepare a schedule of cost of goods manufactured for the year. 43 44 Palmer Company 45 Schedule of Cost of Goods Manufactured 46 For the year ended Xxxxxxx, 20XX 47 48 49 50 51 52 53 Total manufacturing costs 54 55 56 Cost of goods manufactured 57 58 3. Compute the unadjusted and adjusted cost of goods sold for the year. The company considers the current balance in the manufacturing account 59 to not be materially significant and, as such, closes any underapplied or overapplied overhead to cost of goods sold at year end. 60 61 62 63 64 65 66 Unadjusted Cost of Goods Sold 67 68 Adjusted Cost of Goods Sold