Sicily Company reported the following actual cost data for the year: Purchase of raw material (all direct) $266,000

Direct labour cost 160,000

Manufacturing overhead cost 246,000

Change in inventories:

Decrease in raw material $10,000

Decrease in work in process 8,000

Decrease in finished goods 16,000

Sicily Company used a 150% predetermined overhead rate based on direct labour cost. The rate was based on annual estimated overhead cost and direct labour cost of $252,000 and $168,000, respectively. Required: a. Calculate the cost of goods manufactured. (3 Marks) b. What was the cost of goods sold before adjusting for any under or overapplied overhead? (2 Marks) c. By how much was manufacturing overhead cost under or overapplied? (2 Marks) d. Prepare a summary journal entry to close any under or overapplied manufacturing overhead cost to cost of goods sold. (1 Mark) e. Analyze the under or overapplied manufacturing overhead costs calculated in part c above into two separate components: amount due to incorrect estimate of the annual manufacturing overhead costs and an amount due to incorrect estimate of the annual direct labour cost. (2 marks)

Important

********Please illustrate for part b which one should use 240,000 or 246,000