Problem 3-140 Babb Company is a manufacturing firm... Babb Company is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning Balance Ending Balance Raw materials $ 11,900 $ 15,500 Work in process $ 32,400 $ 14,200 Finished goods $ 105,000 $ 122,000 -------------------------------------------------------------------------------- The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 18,000 machine-hours and incur $270,000 in manufacturing overhead cost. The following transactions were recorded for the year: ? Raw materials were purchased, $411,000. ? Raw materials were requisitioned for use in production, $407,400 ($382,000 direct and $25,400 indirect). ? The following employee costs were incurred: direct labor, $335,000; indirect labor, $73,000; and administrative salaries, $150,000. ? Selling costs, $114,000. ? Factory utility costs, $22,000. ? Depreciation for the year was $125,000 of which $115,000 is related to factory operations and $10,000 is related to selling, general, and administrative activities. ? Manufacturing overhead was applied to jobs. The actual level of activity for the year was 14,800 machine-hours. ? Sales for the year totaled $1,287,000. Required: a. Prepare a schedule of cost of goods manufactured in good form. (Do not round predetermined overhead rate. Input all amounts as positive values. Omit the "$" sign in your response.) Schedule of Cost of Goods Manufactured Direct materials: (Click to select)Ending work in process inventoryFinished goods inventory, beginningRaw materials inventory, beginningRaw materials inventory, endingBeginning work in process inventory $ (Click to select)AddDeduct : (Click to select)Raw materials inventory, endingFinished goods inventory, beginningBeginning work in process inventoryPurchases of raw materialsEnding work in process inventory -------------------------------------------------------------------------------- Total raw materials available (Click to select)AddDeduct : (Click to select)Ending work in process inventoryRaw materials inventory, beginningPurchases of raw materialsBeginning work in process inventoryRaw materials inventory, ending -------------------------------------------------------------------------------- Raw materials used in production $ (Click to select)DeductAdd : (Click to select)Raw materials inventory, beginningDirect materialsDirect laborIndirect laborIndirect materials (Click to select)Indirect materialsIndirect laborFinished goodsDirect laborDirect materials (Click to select)Ending work in process inventoryPurchases of raw materialsDirect laborRaw materials inventory, beginningRaw materials inventory, ending (Click to select)Direct laborRaw materials inventory, beginningPurchases of raw materialsManufacturing overhead applied to work in processRaw materials inventory, ending -------------------------------------------------------------------------------- Total manufacturing cost (Click to select)DeductAdd : (Click to select)Raw materials inventory, endingRaw materials inventory, beginningBeginning work in process inventoryEnding work in process inventoryPurchases of raw materials -------------------------------------------------------------------------------- (Click to select)AddDeduct : (Click to select)Purchases of raw materialsEnding work in process inventoryRaw materials inventory, beginningBeginning work in process inventoryRaw materials inventory, ending -------------------------------------------------------------------------------- Cost of goods manufactured $ -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- b. Was the overhead underapplied or overapplied? By how much? (Do not round predetermined overhead rate. Input the amount as a positive value. Omit the "$" sign in your response.) Manufacturing overhead (Click to select)underappliedoverapplied $ c. Prepare an income statement for the year in good form. Prepare off-line Cost of Goods Sold Statement and close any underapplied or overapplied overhead to Cost of Goods Sold and use the Adjusted Cost of Goods Sold to answer this requirement. (Input all amounts as positive values. Omit the "$" sign in your response.) Income Statement (Click to select)Administrative salariesDirect materialsSalesDepreciationSelling costsCost of goods sold (adjusted) $ (Click to select)Cost of goods sold (adjusted)SalesSelling costsAdministrative salariesDepreciation -------------------------------------------------------------------------------- (Click to select)Gross marginGross loss Selling and administrative expenses: (Click to select)Insurance expenseDepreciationAdministrative salariesRent expenseSelling costsDirect materials $ (Click to select)Insurance expenseDirect materialsAdministrative salariesSelling costsDepreciationRent expense (Click to select)Insurance expenseSelling costsDepreciationDirect materialsAdministrative salariesRent expense -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- (Click to select)Net operating lossNet operating income $ -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- references Worksheet Difficulty: Medium Learning Objective: 03-06 Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement. Problem 3-140 Babb Company is a manufacturing firm... Learning Objective: 03-01 Compute a predetermined overhead rate. Learning Objective: 03-07 Compute underapplied or overapplied overhead cost and prepare the journal entry to close the balance in Manufacturing Overhead to the appropriate accounts. Difficulty: Hard Learning Objective: 03-02 Apply overhead cost to jobs using a predetermined overhead rate.

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