Quiz 1 CH 1-3 Nam Amarpret Professor J.P. Vida, CPA, CMA ESSAY/Problem Solving 2) Bakerston 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 Raw Materials $14,000 Work in Process 27,000 Finished Goods 62,000 Ending Balance $22,000 9,000 77,000 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 33,000 machine-hours and incur $231,000 in manufacturing overhead cost. The following transactions were recorded for the year: Raw materials were purchased, $315,000. Raw materials were requisitioned for use in production, $307,000 ($281,000 direct and $26,000 indirect). The following employee costs were incurred: direct labour, $377,000, indirect labour, $96,000; and administrative salaries, $172,000. Selling costs, $147,000 Factory utility costs, $10,000, Depreciation for the year was $127,000 of which $120,000 is related to factory operations and $7,000 is related to selling and administrative activities. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,000 machine-hours Sales for the year totalled $1,253,000, Required: Prepare a schedule of cost of goods manufactured in good form. b. Was the overhead underapplied or overapplied and by how much? c. Prepare an income statement for the year in good form. The company closes any underapplied or overapplied overhead to Cost of Goods Sold.