The bookkeeper of Galactica Ltd., a small manufacturer, has resigned suddenly. The president of the company has requested your assistance, having just found out you are taking a management accounting class. The presidents secretary, trying to be helpful, has alphabetized the list of items concerning operations ended September 30, 2022:

Depreciation factory building 2,200

Depreciation - manufacturing equipment 5,800

Depreciation sales office equipment 3,600

Direct labour 55,500

Finished goods inventory, beginning 12,000

Indirect labour 3,200

Indirect materials used 1,000

Insurance - sales autos 3,000

Property taxes - factory 4,300

Purchases of raw materials 50,100

Raw materials inventory, beginning 1,800

Raw materials inventory, ending 2,600

Rent warehouse for storing finished goods 5,000

Repairs and maintenance - factory 1,900

Sales commissions 28,500

Training costs, new sales manager 1,400

Utilities factory 4,060

Utilities sales office 2,750

Wages billing clerks in sales office 1,700

Work-in-process inventory, beginning 4,200

Work-in-process inventory, ending 5,100

Raw materials inventory includes both direct and indirect raw materials.

Galactica uses a predetermined overhead rate to allocate manufacturing overhead. At the beginning of the year, the estimated total manufacturing overhead was $24,000. The allocation base for applying manufacturing overhead is machine hours. Machine hours for the year were estimated as 10,000. Actual machine hours used were 9,000.

Required: Using either a schedule of cost of goods manufactured, or T accounts, whichever method you prefer:

3 a) Determine the cost of the direct materials transferred into production during the year.

5 b) Determine the cost of goods manufactured during the period.

7 c) Has manufacturing overhead been over or underapplied? Prepare the journal entry to dispose of this amount.

2 d) No amount is available for ending inventory. The accountant had noted the cost of goods sold was $125,000. What is the cost of ending inventory?