XYZ Co operates a job-order costing system and applies overhead cost to jobs on the basis of direct materials used in production (not on the basis of raw materials purchased). In computing a predetermined overhead rate at the beginning of the year, the companys estimates were: manufacturing overhead cost, $800,000; and direct materials to be used in production, $500,000. The companys inventory accounts at the beginning of the year were:

	Beginning	Ending
Raw Materials	20,000	80,000
Work in Process	150,000	70,000
Finished Goods	260,000	400,000

The following actual costs were incurred during the year:

Purchase of raw material(all direct)	510,000
Direct labor cost	90,000
Manufacturing overhead cost:
Indrect labor	170,000
Property taxes	48,000
Depreciation of equipment	260,000
Manintenance	95,000
Insurance	7,000
Rent, building	180,000

1. a. Compute the predetermined overhead rate for the year. b. Compute the amount of underapplied or overapplied overhead for the year.

2. Prepare a schedule of cost of goods manufactured for the year.

3. Compute the Cost of Goods Sold for the year. (Do not include any underapplied or overapplied overhead in your Cost of Goods Sold figure.) What options are available for disposing of underapplied or overapplied overhead?

4. Job 215 was started and completed during the year. What price would have been charged to the customer if the job required $8,500 in direct materials and $2,700 in direct labor cost and the company priced its jobs at 25% above the jobs cost according to the accounting system?

5. Direct materials made up $24,000 of the $70,000 ending Work in Process inventory balance. Supply the information missingbelow:

Direct Materials 24,000

Direct Labor ?

Manufacturing Overhead ____?____

Work-in Process nventory 70,000