Question1:-Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basis of direct materialsused in production(noton the basis of raw materials purchased). Its predetermined overhead rate was based on a cost formula that estimated $139,500 of manufacturing overhead for an estimated allocation base of $93,000 direct material dollars to be used in production. The company has provided the following data for the just completed year:

Purchase of raw materials$136,000Direct labor cost$89,000Manufacturing overhead costs:Indirect labor$136,900Property taxes$8,200Depreciation of equipment$16,000Maintenance$11,000Insurance$10,400Rent, building$33,000

BeginningEndingRaw Materials$21,000$16,000Work in Process$46,000$37,000Finished Goods$71,000$58,000

Required:

1. Compute the predetermined overhead rate for the year.

2. Compute the amount of underapplied or overapplied overhead for the year.

3. Make schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials.

4. Compute the unadjusted cost of goods sold for the year. Do not include any underapplied or overapplied overhead in your answer.

5. Assume that the $37,000 ending balance in Work in Process includes $8,300 of direct materials. Given this assumption, supply the information missing below!!

Question 2:-Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,520,000 of total manufacturing overhead for an estimated activity level of 76,000 machine-hours.

During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company's warehouse. The company's cost records revealed the following actual cost and operating datafor the year:

Machine-hours64,000Manufacturing overhead cost$1,471,000Inventories at year-end:Raw materials$14,000Work in process (includes overhead applied of $64,000)$90,500Finished goods (includes overhead applied of $204,800)$289,600Cost of goods sold (includes overhead applied of $1,011,200)$1,429,900

Required:

1. Compute the underapplied or overapplied overhead.

2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry.

3. Assume that the company allocates any underapplied or overappliedoverhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry.

4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?