The Gitano company uses a system of cost prices per order. Expenses manufacturing costs are allocated to products on the basis of raw materials used, and not on the basis of the raw materials purchased. When calculating the rate pre-determined allocation of indirect manufacturing costs, which was done at the beginning of the period, the company forecast manufacturing overhead of $800,000, while the cost of raw materials to be used for production amounted to $500,000. 

Here are the company's stock accounts at the beginning and end of the period.

At the beginning At the end Materials .................................................. . $20,000 $80,000 Ongoing products........................................150,000 70,000 Finished products ...................................... .260,000 400,000

The actual costs incurred during the period are as follows: Purchase of materials (only raw materials) ...........................$510,000 Direct labor.............................................................................. 90 000 Indirect manufacturing costs: Indirect labor .......................................................................... 170,000 Property tax ................................................ ............................ 48,000 Depreciation of equipment ............................................... ..... 260,000 Maintenance ................................................. .......................... 95,000 Insurance................................................. ...................................7,000 Rent ................................................. ......................................180,000

1. a) Calculate the pre-determined allocation rate for the manufacturing overhead of the period. b) Calculate the manufacturing overhead for the period. 2. Prepare the cost of goods produced statement for the period. 3. Calculate the cost of sales during the period. (Do not include indirect manufacturing costs that are understated or overstated in cost of sales.) What possibilities are available to you to present the indirect costs that are under-allocated or overcharged? 4. The company started and completed order #215 during the period. Now suppose that the cost of raw materials and the cost of labor directly amount to $8,500 and $2,700 respectively, and that the price of the products sold is 25% higher than the manufacturing cost. In this context, what will be the price of order no.215? 5. The cost of raw materials represented $24,000 of the $70,000 balance of closure of products in progress. Determine the cost of direct labor and the indirect manufacturing costs below:

Raw materials.................... $24 000

Direct labor..................... ?

Indirect manufacturing costs .... ?

Current products ................ $70 000