Rex Manufacturing had the following data for the period just ended:

Work in process, Jan. 1

$20,000

Work in process, Dec.31

25,000

Finished goods, Jan. 1

72,000

Finished goods, Dec. 31

65,000

Direct materials used

120,000

Direct labor

150,000

[10,000 Hrs]

Factory depreciation

65,000

Sales

680,000

Advertising expense

52,000

Sales salariesexpense

25,000

Utilities - FactoryUtilities - Admin office

27,000

3,000

Indirect materials

20,000

Indirect labor

35,000

Amortization OfficeEq20,000

Rent -Factory50,000

-Admin10,000

Propertytaxes -factory12,000

-Admin5,000

Manufacturingoverhead is applied on the basis of direct labour hoursat $16.50 per hr

Over/Under-applied overhead is charged to Cost of goodsold.

Required:

1. Calculate Rex's cost of goods manufactured.
2. Determine if overhead is over or under applied. Make the journal entry necessary to close the balance in the overhead accountto Cost of Goods Sold
3. Prepare Rex's Income Statement
4. Determine the gross margin percent and explain its importance