PROBLEM 3-24 Schedule of Cost of Goods Manufactured; Overhead Analysis [LO1, LO2, LO3, L06, L07] The Pacific Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based on a cost formula that estimated $126,000 of manufacturing overhead for an estimated allocation base of $84.000 direct labor dollars. The company has provided the following data in the form of an Excel worksheet: A B C D 1 Beginning Ending 2 Raw Materials $21,000 $16,000 3 Work in Process $44,000 $40,000 4 Finished Goods $69,000 $60,000 5 6 The following actual costs were incurred during the year 7 Purchase of raw materials (all direct) $133,000 Direct labor cost 580,000 9 Manufacturing overhead costs 10 Insurance, factory $7,000 11 Depreciation of equipment $18,000 12 Indirect labor $42,000 13 Property taxes $9,000 14 Maintenance $11,000 15 Rent, building $36,000 18 17 4 6 6 Sheet1 Sheela Sheets Required: 1. Compute the predetermined overhead rate for the year. b. Compute the amount of underapplied or overapplied overhead for the year. 2. Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials. 3. Compute the unadjusted cost of goods sold for the year. (Do not include any underapplied or overapplied overhead in your cost of goods sold figure.) What options are available for dis- posing of underapplied or overapplied overhead? 4. Job 137 was started and completed during the year. What price would have been charged to the customer if the job required $3,200 in materials and $4,200 in direct labor cost, and the company priced its jobs at 40% above the job's cost according to the accounting system? 5. Direct labor made up $8,000 of the $40,000 ending Work in Process inventory balance. Sup- ply the information missing below: Direct materials . . S ? Direct labor . . . . . .. 8,000 Manufacturing overhead. ? Work in process inventory $40,000PACIFIC MANUFACTURING COMPANY Manufacturing overhead cost 126,000 Direct labor dollars 84,000 Inventory: Beginning Ending Raw materials 21,000 $ 16,000 Work in process 44,000 $ 40,000 Finished goods 68,000 $ 60,000 Actual costs incurred: Purchase of raw materials (all direct) 133,000 Direct labor cost 80,000 Manufacturing overhead costs: Insurance, Factory 7,000 Depreciation of equipment 18,000 Indirect labor 42,000 Property taxes 9,000 Maintenance 11,000 Rent, building 36,000 Job 137: Direct materials 3,200 Direct labor cost 24,200 above job cost according to the accounting system 40% Direct materials Direct labor hours 8,000 Manufacturing overhead 2 Work in process inventory $ 40,000PACIFIC MANUFACTURING COMPANY Computations 1a. Estimated total manufacturing overhead cost Estimated total amount of the allocation base Predetermined overhead rate 1b. Actual manufacturing overhead costs: Insurance, factory Depreciation of equipment Indirect labor Property taxes Maintenance Rent, building Total actual costs Applied manufacturing overhead costs Underapplied overhead $ Try again! 2. PACIFIC MANUFACTURING COMPANY Schedule of Cost of Goods Manufactured Direct materials: Raw materials inventory, beginning Add purchases of raw materials Total raw materials available Deduct raw materials inventory, ending Raw materials used in production S Direct labor Manufacturing overhead applied to work in process Total manufacturing costs Add: Work in process, beginning Deduct: Work in process, ending Cost of goods manufactured3. Unadjusted cost of goods sold: Finished goods inventory, beginning Add: Cost of goods manufactured Goods available for sale Deduct: Finished goods inventory, ending Cost of goods sold Direct materials Direct labor Overhead applied Total manufacturing cost $ Price to customer 5. The amount of overhead cost in Work in Process was: Direct labor cost Overhead rate Work in process overhead cost The amount of direct materials cost in Work in Process was: Total ending work in process Deduct Direct labor Manufacturing overhead Direct materials $ Try again! The completed schedule of costs in Work in Process was: Direct materials Direct labor Manufacturing overhead Work in process inventory Try again