The Detroit Gear Corporation uses Normal lob-Order Costing in its only production department. Overhead is applied to jobs by a predetermined rate, which is based on direct labor hours. The Company began business on December 1, 2018. The only job started into process during December was Job 450. During December ute Company purchased direct materials with a total cost of $45.000. 1$2.500 lof these direct materials were used on Job 450. The Company also charged a total of $7,550 in conversion costs to Job 450 during December Job 450 was NOT finished as of the end of December and no other jobs were worked on during the month. There was no underapplied or overapplied overhead for December. SDM = 2500 + Construim lost =DL= OH = $7550 The following transactions occurred during 2019. and wap 2018 & Bag wil 2017 : 910.050 1. Estimated overhead for 2019 is $1,250,000. The estimated direct labor hours for 2019 total 200,000. 2. Direct materials purchased during 2019 cost a total of $750,000. 3. Direct materials were used on jobs during 2019 as follows: Job 450 $150,250 Job 500 $180,750 Job 550 $237,125 Job 600 $131,875 4. During 2019, direct labor hours were charged to jobs as follows: Job 450 45,000 hours Job 500 56,100 hours Job 550 60,800 hours Job 600 23,100 hours All direct labor hours used during 2019 had a rate of $20 per hour. 5. Other Costs incurred during 2019 include the following: Factory Equipment Calibration Coh) $125,000 Factory Employee Training Co 85,000 Indirect Labor COH 370,000 Sort betuen actual or and Accounting Dept. Salaries ( /s) 7 175,000 Other Selling & Administrative Salaries 250,000 2/5 ato al Indirect Material (H) 50,000 Factory Insurance (H) 136,000 Factory Utilities (CH) 120,000 Selling & Administrative Utilities (2/5) 24,000 Miscellaneous Overhead Cactul 0H) 123,000 Misc. Selling & Administrative Expense (2/s) 8,250 Factory Equipment Depreciation (0) 21175,000 Finished Goods Warehouse Depreciation (41 7,500 6. Jobs 450, 500 and 550 were completed during the year. Job 450 consisted of 268,310 units; Job 500 consisted 110,296 units; and Job 550 consisted of 153,015 units. 7. 200,000 units of Job 450 were sold and all units of Job 550 were sold at the following sales prices: Job 450 sold at $8 per unit Job 550 sold at $13 per unit No units of Job 500 were sold during 2019. 7G. 14 (E. Add together the total cost charged to Jobs 450,500 and 550. Does this answer equal the amount of Cost of Goods Manufactured that you got in Part D? Should it? (F/Compute the Underapplied or Overapplied Overhead for 2019. G. Prepare, in good form, an income statement for 2019 using our "method 1". Don't forget to include a proper heading. H. Now assume that you are to allocate (prorate) the underapplied or overapplied overhead to the appropriate accounts. You should be able to figure out how much applied overhead is in Work in Process (just Job 600). You can assume that there is $422,229 of applied overhead in Finished Goods. Based on the total applied overhead for the year, you should now be able to figure out how much applied overhead should be in Cost of Goods Sold. Do the proration and show your calculations as we did in class. I. If you were to prepare a new income statement after prorating underapplied or overapplied overhead, would income be higher or lower than what you got in Part "G"? By how much? The Detroit Gear Corporation uses Normal lob-Order Costing in its only production department. Overhead is applied to jobs by a predetermined rate, which is based on direct labor hours. The Company began business on December 1, 2018. The only job started into process during December was Job 450. During December ute Company purchased direct materials with a total cost of $45.000. 1$2.500 lof these direct materials were used on Job 450. The Company also charged a total of $7,550 in conversion costs to Job 450 during December Job 450 was NOT finished as of the end of December and no other jobs were worked on during the month. There was no underapplied or overapplied overhead for December. SDM = 2500 + Construim lost =DL= OH = $7550 The following transactions occurred during 2019. and wap 2018 & Bag wil 2017 : 910.050 1. Estimated overhead for 2019 is $1,250,000. The estimated direct labor hours for 2019 total 200,000. 2. Direct materials purchased during 2019 cost a total of $750,000. 3. Direct materials were used on jobs during 2019 as follows: Job 450 $150,250 Job 500 $180,750 Job 550 $237,125 Job 600 $131,875 4. During 2019, direct labor hours were charged to jobs as follows: Job 450 45,000 hours Job 500 56,100 hours Job 550 60,800 hours Job 600 23,100 hours All direct labor hours used during 2019 had a rate of $20 per hour. 5. Other Costs incurred during 2019 include the following: Factory Equipment Calibration Coh) $125,000 Factory Employee Training Co 85,000 Indirect Labor COH 370,000 Sort betuen actual or and Accounting Dept. Salaries ( /s) 7 175,000 Other Selling & Administrative Salaries 250,000 2/5 ato al Indirect Material (H) 50,000 Factory Insurance (H) 136,000 Factory Utilities (CH) 120,000 Selling & Administrative Utilities (2/5) 24,000 Miscellaneous Overhead Cactul 0H) 123,000 Misc. Selling & Administrative Expense (2/s) 8,250 Factory Equipment Depreciation (0) 21175,000 Finished Goods Warehouse Depreciation (41 7,500 6. Jobs 450, 500 and 550 were completed during the year. Job 450 consisted of 268,310 units; Job 500 consisted 110,296 units; and Job 550 consisted of 153,015 units. 7. 200,000 units of Job 450 were sold and all units of Job 550 were sold at the following sales prices: Job 450 sold at $8 per unit Job 550 sold at $13 per unit No units of Job 500 were sold during 2019. 7G. 14 (E. Add together the total cost charged to Jobs 450,500 and 550. Does this answer equal the amount of Cost of Goods Manufactured that you got in Part D? Should it? (F/Compute the Underapplied or Overapplied Overhead for 2019. G. Prepare, in good form, an income statement for 2019 using our "method 1". Don't forget to include a proper heading. H. Now assume that you are to allocate (prorate) the underapplied or overapplied overhead to the appropriate accounts. You should be able to figure out how much applied overhead is in Work in Process (just Job 600). You can assume that there is $422,229 of applied overhead in Finished Goods. Based on the total applied overhead for the year, you should now be able to figure out how much applied overhead should be in Cost of Goods Sold. Do the proration and show your calculations as we did in class. I. If you were to prepare a new income statement after prorating underapplied or overapplied overhead, would income be higher or lower than what you got in Part "G"? By how much