Question
The GELBER CORPORATION operates a job order cost system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead
The GELBER CORPORATION operates a job order cost system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based on a cost estimate of $126,000 of manufacturing overhead and $84,000 of direct labor dollars. The company has provided the following data:
Beginning Ending
Raw Materials $21,000 $16,000
Work in Process $44,000 $40,000
Finished Goods $68,000 $60,000
The following costs were incurred during 2017:
Purchase of raw materials (all direct) $133,000
Direct labor cost $80,000
Manufacturing overhead costs:
Insurance, factory $7,000
Depreciation of equipment $18,000
Indirect labor $42,000
Property taxes $9,000
Maintenance $11,000
Rent, building $36,000
REQUIRED:
1. Compute the predetermined overhead rate for 2017.
2. Compute the dollar amount of under/overapplied overhead for 2017.
3. Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials.
4. Compute the unadjusted cost of goods sold for the year. Do not include any under/overapplied overhead in your answer.
5. What options are available for disposing of under/overapplied overhead?
6. Job 140 was started and completed during the year. What selling price would have been charged to the customer, if the job required $3,200 in materials and $4,200 in direct labor cost, and the company priced its jobs at 40% above the jobs cost according to the accounting system?
7. Direct labor made up $8,000 of the $40,000 ending inventory balance for Work in Process. Compute the direct materials cost and the manufacturing overhead costs on this job.
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