Question 2.1 (Total: 36 marks)

The following costs are attributed to the Gandalf and Company:

Purchase of raw materials (all direct)	$291,100
Direct labour cost	141,800
Manufacturing overhead costs	198,100
Change in inventories:
Decrease in raw materials	$9,100
Decrease in work in process	4,100
Decrease in finished goods	13,200

Gandalf and Company used a 120% predetermined overhead rate based on direct labour cost.

Submission Instructions:

1. Calculate the cost of goods manufactured.
2. What was the cost of goods sold before adjusting for any under or over applied overhead?
3. By how much was manufacturing overhead cost under or over applied?
4. Prepare a summary journal entry to close any under or over applied manufacturing overhead cost to the cost of goods sold. Is such an entry appropriate in this situation? Why or why not?