Problem #2:

Almeda Products, Inc. uses a job order costing system. Inventory balances on April 1 were raw materials, $32,000; work in process, $20,000; and finished goods, $48.000

Additional information are as follows:

a. Raw materials purchased $170,000.

b. Raw materials issued from storeroom to production $180,000; 80% direct and 20% indirect.

c. Direct labor $200,000; indirect labor $82,000; and selling and administrative salaries $90,000.

d. Utility costs incurred in the factory, $65,000. Advertising costs $100,000

e. Insurance Expense $20,000; 90% factory related and 10% selling and administrative related.

f. Depreciation Expense $180,000; 85% for factory assets and 15% for selling and administrative assets

g. Predetermined overhead rate is 175% of direct labor cost. Cost of goods manufactured was $700,000

h.Sales for the year, $1,000,000; cost of the goods sold, $720,000.

Required: 1. Compute for the under- or over-applied overhead for the year. Is it under-applied or over-applied?

2. Compute for the ending balance of raw materials, work in process and finished goods.

3. The company under- or over-applied overhead to cost of goods sold. Prepare an income statement.